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How is making an offer on a foreclosure different from making an offer to an owner?

I would like to make an offer on a house.  It's a foreclosure and I would like to offer significantly less than it's listed.  Can I do that?
  • November 06 2013 - Foley
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Answers (7)

Best Answer

It all depends on the market you are in.  For example...I am in the Central Florida area.  The market here is very competitive right now, due to a lack of inventory.  You probably wouldn't get anywhere with a low ball offer on a foreclosure at this moment, but who knows! :)

First thing...you should definitely find an experienced Realtor to help you with the process.  This could go one of two ways....

1.  They reject your offer totally.
2.  They counter your offer.
  • November 06 2013
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Hello there,

Since foreclosures are largely owned by banks and managed by third-party asset management companies, offers on foreclosures have to be handled differently than normal offers. Firstly, you should prepare for the bank to take a while to respond to your offer (or not respond at all). They typically gather offers for a period of time, then when that window passes, accept the highest offer. Good luck!
  • February 20
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You can offer anything you like, but it all depends on your market. In a seller's market even foreclosures sometimes sell for above listing price. Keep in mind that foreclosures are priced by agents, and they try their best to come up with a true market value. Just because it's a foreclosure doesn't mean it's not market value :D
  • February 20
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The question is about foreclosures and whether you can give a "low-ball" offer.  Of course you can do that but by and large the days of that working are long gone.  At the current time on the beach, the bank owned properties and short sales are tricking out, having been held while the market was down. The market is really good now, banks are savvy, and they get good advice. A lot of "foreclosures" are priced at market,...if the foreclosure was a year ago or more.

Further away from the beach, and depending on the area, you can find more foreclosures and a wider range of pricing relative to the market.  Tammy is right, the offer strategy is important.  And the first critical piece of information is how is the home priced relative to the market.

Here is what has a big effect on foreclosure pricing - There is a 1 year right of redemption in Alabama.  That means that the former owner can come back up to a year after the foreclosure date and buy back the property.  They have to pay everyone out, plus 18% interest.  It doesn't happen often at all, but banks will not loan to consumers until the year has expired.

Hope this helps!  It was a great question and one that I get pretty often. 
  • February 20
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Profile picture for tamiroberts

Some foreclosures come on the market that are way over priced for the area for a variety of reasons. Consequently, they do not sell right away.  Most foreclosure sellers (banks, fannie mae, Freddie mac, HUD) have specific time line procedures and after so many days on the market without an offer, they will reduce the price by a certain percentage.  So one thing you can look for are homes that have been on the market for a long time and the seller might be more likely to take a lower offer.  This is one offer strategy.

Another thing you might want to be aware of is that some foreclosures come on the market priced under market value and go into a multiple offer situation almost immediately. These homes will usually sell for over the asking price.

The best thing to do is to get a buyer's agent that uses a wide variety of tools to help you determine what the fair market value of the home really is...regardless of the asking price.  Then you can make a more informed decision on how much to offer.

Let me know if you I can help you.

  • March 11 2014
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Profile picture for zrismom
Thank You! I have put offers on 2 so far for asking price and paid for the inspections and they both failed! I just felt like the next one I should offer less since I will have to do some improvements in the long run anyway! Thanks again!
  • November 06 2013
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Yes you can.
You ask how it is different than an owner. A Bank is the owner. They likely own millions of dollars worth of assets. They aren't in the same sort of hurry to sell it as an individual would be. They don't "have" to sell it. They want to, but they can certainly hold out for the right price if they are so motivated. They also can let it go for a deal. You'll have to asses their motivational state, or have an Agent help you do so.
  • November 06 2013
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