6 Ways For Builders to Beat REOs

Speakers give strategies for competing against foreclosures.

Selling homes effectively against foreclosures has become many a builder’s quixotic quest in the last year. Buyers want a bargain, and with the median price of existing homes standing at $172,400 versus $217,400 for a median priced new home, builders are having a tough time making the sale.

But there are ways to do just that, according to speakers at the International Builders Show in Las Vegas on Tuesday, who suggested a number of strategies for competing with REOs.

1. Welcome buyers who have tried to buy a foreclosure. They will appreciate your attention because they have likely had their “hearts broken” multiple times by the homes that got away, as moderator Carol Ruiz of Red Rocket PR in Culver City, Calif., who shared how her own daughter has unsuccessfully tried to buy a foreclosed home. “For a first-time buyer to buy an REO is a steep task,” agreed John McLaury, senior director of sales at KB Home Nevada. “It is not uncommon for real estate agents to write 20 contracts” in pursuit of such a sale, only to have the bank fail to respond. Such properties also frequently sell for significantly more than the bargain prices advertised, he added, which also frustrates would-be buyers, who might like to hear how new-home pricing would be different.