Profile picture for user9709803

pre forclosure

I have posted on here many times, and want to thank everybody for there info and guidance. here is a question im sure many have asked. As I am looking for a home to purchase I am seeing a lot of home prices that are not reflecting what the market is today. the average price in the area is 120k and this home is a pre forclosure. the house was sold at 175k in 2006 and is now being sold for 175k again. what do you think would be a fair price and what would the bank in a pre foreclosure think would be insulting? thanks for the help..
  • June 28 2012 - Austin
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Answers (5)

Profile picture for lkajfh
Keep in mind a pre-foreclosure is not owned by the bank and also requires the current "owner" to agree and sign off on the listing price, any sale etc.  Many times lender and borrower are at odds and the process of selling the house could involve games being played by the borrower to prolong the foreclosure process.

The bank may or may not have authorized a short sale up to a certain loan loss amount.  And as others have mentioned they may be looking to see what the market does at the current price, then they may adjust the price.  Or as I said there may be other factors at work.

And don't worry about "insulting" a bank.  Banks are entities and don't have the emotional capacity to be insulted.  The asset manager looks at the offer, determines if it meets their financial requirements for the property and says yes or no.  If it doesn't sell after so much time, they lower the financial requirements (the price) and start the processes over.  Make your offer and see what happens, but if it doesn't go anywhere don't get too caught up in it, just keep an eye on it to see if they lower the price.  Get an agent to set up a custom search with an email alert for price changes on the property.
  • July 02 2012
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Profile picture for droopyd
"Pre-foreclosure" can also refer to a situation where the lender is 90 days behind on payments, but the bank has yet to initiate action. Many houses in this situation are listed on this site as being in "pre-foreclosure." 
  • June 29 2012
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The amount the home was purchased for and the amount that is owed to the bank has absolutely NO INFLUENCE on the market value of the home and how much you should offer for it.  A short sale is often priced very similarly to other comparable homes in the area, BUT you may be able to purchase it at a discount if you are able to offer all CASH.  I advise you to work with a specialist in pre-foreclosure properties, such as a Realtor with a CDPE designation.
  • June 29 2012
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This article will give you some ideas what forclosure is:

Short Sale
If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.

  • Benefit: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual's public record, and in many cases will allow the homeowner to avoid a deficiency judgment. Borrower may qualify for another mortgage in as little as 24 months (as opposed to five years for a foreclosure).
  • Drawback: Short sales can be a trying process in which a homeowner is best served by contracting with a qualified real estate agent to guide the way.

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Please call me today for a free confidential evaluation of your individual situation, property value, and possible options.

  • June 28 2012
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By 'pre foreclosure' I presume you mean a short sale.

The general answer is to find recently sold homes that are comparable in size and condition to the home you are attempting to purchase and see what was their closing price.

Often short sale homes will be listed at the value of the underlying mortgage in order for the homeowner to prove to the bank there was no interest in the home at that price. Once the bank gets an offer, they will order a Realtor price opinion or an appraisal. Ideally that will set the value of the home (and not the asking price).

Good luck!

  • June 28 2012
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