Value differences between REO’s, Short sales and Willing Seller transactions.

Currently the Nevada County real estate market is three tiered.  The tiers are determined by the type of sale that is being considered.  A willing seller (the “traditional” and most common transaction over the last few years), a lender owned property (commonly called a REO for real estate owned) and a short sale (homeowner still owns the property, but is trying to sell it for less than is owed to the lender). 

There are notable price differences between these types of properties.  Also noticeable are the significant differences in the condition and quality of these properties. Willing sellers use the “polish the apple” approach, doing there best to make the property present itself in the best paossible way.  Short sellers have some incentive to keep the property neat, but rarely spend any money or significant effort in keeping up a property.  REO properties are usually in some state of disrepair and neglect.

 Of note to buyers is that standard disclosure rules apply to willing sellers and short sellers as they are still the owners.  Lenders have vastly reduced disclosure and responsibility requirements.  The reduction of disclosure and responsibility for the lenders, transfers risk to buyers. 

 Pending single family home sales for Nevada County as of August 10, 2009 are as follows:

	Willing Sellers	Short Sales	REO’s
Pending Home Sales – Units	80	21	38
Average Asking Price	$392,200	$320,000	$259,200
Median Asking Price	$349,500	$300,000	$239,900

While not a scientific study, as I expected there is a significant difference in pricing.  Buyers do require a substantial discount for taking on more risk and lower quality properties.  For more information, see my blog on Things to Think about when Buying Foreclosures: http://rolfkleinhans.wordpress.com/2009/07/14/buyingaforeclosure/

Rolf Kleinhans is a Broker/Realtor™ with Recreation Realty Inc./Sierra Cascade Properties in Nevada City.  Actively involved with the Nevada County Association of Realtors (NCAOR), he has held all officer positions of NCAOR including President, and served at the state level as a Director of the California Association of Realtors.  He has held the appointed position for the Nevada County User Fee Committee (Past Chairman), is currently serving on the Nevada County Sewage Disposal Technical Advisory Group as Vice Chairman, and represents the Realtor’s organization as a member of the Economic Resource Council.  He can be reached at 530-559-5000 or www.SierraCascadeProperties.com.