Banks' new scheme to sell foreclosed homes
They're offering eye-popping discounts -- like 50% off what the home sold for just a couple of years ago.
The deals are so incredible that offers flood in, even in today's terrible real estate market.
The banks choose the potential buyers with the best credit and most cash and ask them to submit their "highest and best" bid.
In other words, they had no intention of accepting the fire sale asking price.
But the buyers -- mostly investors who want to flip the home as soon as possible -- usually respond with higher bids and someone closes the deal.
According to MSNBC.com, banks are most likely to do this in places where prices have dropped sharply, like California, Florida, Nevada and Arizona.
"They're all doing it -- Countrywide, Wells Fargo, Chase," says Sacramento real estate agent Erin Attardi. "They get multiple offers right away, the buyer they want to work with -- and the house sells fast."
Although advertising a home for even 10% less than comparable homes just to attract attention further depresses already depressed property values, the banks are that desperate to unload foreclosed homes.
One in every four sales nationwide between January and March involved a distressed property. In hard-hit areas like Las Vegas and Los Angeles, foreclosed homes comprised more than half of first quarter sales, according to Moody's Economy.com.
Trying to flip a home in this market is risky business -- and strictly for experts.
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