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If a foreclosure home is asking for $120,000 by a lender, what is a reasonable price to offer?

  • April 08 2010 - Paradise Valley
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Answers (9)

Offer full price as long as the value is there.  If you don't someone else will.  Also one thing to concider when making an offer on an REO is your earnest money.  The more the better.  More earnest shows strength of an offer.  Your less likely to backout if you put up a bunch of money and the lender knows that to. (Example) Your 118k offer with 5k earnest is stronger then the 120k with 500.00 earnest.  It shows you are serious.

  • April 26 2010
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This question does not give us enough info more information is needed. But if the house has been on the market for a while (90 day) and with no offers and there is no bidding going on some/most banks are willing to discount between 20% to 40% from the asking price. They are not in the business of holding property. The larger inventory of foreclosured homes they have in their portfolio the less money they can lend and make money.

  • April 08 2010
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This is almost impossible to answer unless you know more about the property.  I have seen houses that are listed for $120k sell for $150k due to bidding wars and I have seen houses listed for $120k sell for $80k because it was a wreck and needs so much work.  Seek the "free" advice of a buyers agent and have them help you determine the "probable sales price" for the home.  Any good buyers agent would be anxious to do some leg work to represent you and make sure that you don't pay too much or waste your time with an offer that will never have a chance.
  • April 08 2010
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Dear MTH:

Good question. The answers presented here are solid too.

Ask your Realtor to get you:
1. Comparable sellingprices of similar homes in the neighborhood
2. Determine how long the home has been on the market
3. Factor in lender's willingness to pay toward your closing costs. Fannie Mae typically does this as an example.
4. When the Realtor shows you the home, take into consideration the repairs necessary to bring the foreclosure home into market condition with the comparables.

Considering all of these points, can give you an opportunity to purchae a home at a great price.

Don't forget if you can obtain a purchase contract by April 30, there is the Federal Tax Credit available.

Plus the State of Arizona and the City of Phoenix still have free grant money available for the purchased of foreclosure homes in certain zip codes.

If I can answer another question for you, just ask.

Regards, Jeff

Jeff Masich, Realtor
Arizona Homes and Land
HomeSmart Realty
  • April 08 2010
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If it's been on the market for less than 15 days, they generally will not accept anything less than asking price.

The banks are very strict now. Unlike they were at the height of the real estate crash. They used to take offers that were 10-25% below list price, but they trust the market comps given to them by the agents and stick on their price for weeks.
  • April 08 2010
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There are good responses here. 
Your reasoning is sound.  Why pay $120,000 if you don't have to, right?  The reason why you should be carefull what you offer is that you have to compete with other bids.  Now, the seller agent cannot disclose the amount of the bids, but they can tell other bidders wether there has been a full price offer or not.  If there is no full price offer, then no information is given out.  So if there is a bid out there for $119,000 and you offer $118,000, you may miss the boat.  First, find a Realtor and see if the home is worth $120,000.  If it is worth it and you want it, offer $120,000.  If you have several homes you are interested in then offer whatever you want.

  • April 08 2010
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Basing an offer price on asking price is a worthless endeavor. You need to look at the most recent comparable sales ("comps"), like wetdawgs said. After that, consider how long the property has been on the market, condition of the home, etc. And... you would well advised to secure the services of a buyer's agent who can assist you in the process.
  • April 08 2010
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Once again let me reiterate, "asking price means nothing".  You need to know the value of the house in order to make a intelligent decision.

With foreclosure homes you can often get a bargain compared to the market value, but if the asking price is too high then you want to bid less.  If the asking price is low you may end up in a bidding war with other buyers.

Find the correct value and make your serious offer accordingly.
  • April 08 2010
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It depends on the condition of the house and the comps.  It is quite possible the $120,000 is a reasonable price.
  • April 08 2010
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