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How much do you generally offer on a "Bank Owned" property? Is there a general rule?

  • October 12 2009 - Campus Area (University District)
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Answers (5)

Aloha Lorie,
Great question!  In my experience, it varies wildly. This is one of the reasons it's critical to have a dedicated buyers agent working with you.  On Kauai, I've had clients make offers on REO properties where they were out bid above asking price.  On the other hand, some REO properties go for less than asking. 

Rather than a formula, it's important to know your market; look at the comparables - both regular sales and distressed sales (pre-foreclosure short sales and REOs).  From those comparables, you'll be able to see what the "value" is, and where you can begin to negotiate.

Here's a recent article with some tips on buying REO's.

Good luck!  If I can help, please feel free to contact me.
With warm aloha,
Susanna
  • October 12 2009
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There is no general rule as to what to offer. It can be more or less than the current asking price. You have to do your homework...review recent sales, examine what is currently available on the market, determine the amount of repairs needed on the Bank Owned property. If you can find a home that sold recently, and is similar to the one for sale, subtract the necessary repair costs and you can arrive at a price. If the market is sluggish, or the home needs a lot of repairs, you may be able to offer less as there will be less competition. Many bank owned properties do not qualify for FHA financing due to the extent of the repairs. The bank may have it priced to sell quickly, which will attract multiple offers, and you have to know exactly how much repairs are so as not to over bid the property compared to the market.

Most importantly you have to be comfortable with what you offer and be willing to walk away if it takes more than that.
  • October 12 2009
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Many REO sellers have established rules regarding offers. Hud has their rules, Fannie (homepath), Freddie (homesteps) and etc... Finding an agent that has experience with the different types of foreclosures is paramount. The person who understands the rules of the many different types of foreclosures has the best chance of saving the most amount of money and winning the property.
  • October 12 2009
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This is a situation that varies widely. Make sure you have a buyer agent that knows your market and is working for you. good luck.
  • October 12 2009
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There is no general rule.  This can also vary by market.  In Nashville where I practice, most banks will not accept anything less than list.  They will reject offers and then reduce the price later to a price lower than a previous offer.  The properties in good shape will get multiple bids and go over list price.  In Los Angeles where I'm looking to buy, it's almost at lightning speed how quickly a foreclosure will bring in multiple offers - many of them cash. 

Check the foreclosures in your area and see who's listing them.  Many times you'll see foreclosure listings concentrated among listing agents who have good rapports with the banks/asset managers.  Those listing agents usually have a team with buyer's agents as well.  That would be a good place to find an agent to represent you as you purchase a foreclosure.  They'll also be familiar with how to strategically bid to win.
  • October 12 2009
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