Zillow Advice: Buying Foreclosures - is the rule of thumb is not to bid any lower than 80% asking price?

There is no rule of thumb. ...

Wed, 08 Jul 2009 02:30:00 GMT

There is no rule of thumb. Your agent should provide you with a detailed CMA (Comparative Market Analysis) so you can see how many properties are listed in the same subdivision, how many days they have been on the nmarket, how many listings expired and how many properties sold for how much. In this market, I would not go back more than 6 months. Compare properties not only by price/sqft, but also what type of listing it was (retail, distress). Then take into consideration how much work the property that you are interested in will need. Last but no least, decide how much paper equity you'd like to have and based on all these factors, decide how much you want to offer. It could be more, but also could be less than list price. Hope this helps!

Not really. On bank ...

Sat, 04 Jul 2009 17:00:00 GMT

Not really. On bank owned properties 80% is a reasonable offer and expect a counter offer. 90% is generally acceptable to the bank.

Throw all conventional thinking ...

Sat, 04 Jul 2009 16:52:00 GMT

Throw all conventional thinking out the window. The problem with real estate professions is many fit into a box and can't think outside of it.

Many agent over price properties because they can be honest with the sellers. So 80% still might be too high. Other houses are priced below the market and are already a good buy and 80% is an insult...or steal if you can get it.

I go by current FHA appraisal guidelines no matter the property or price becuase it is a good measure. Current guidelines require 3 properties sold w/i the last 90 days to determine market value. You have to keep expanding even out of the area if there aren't 3 good comps in the neighborhood. This is give you a good indication of a true market value.

However, when it comes to short sales, the lenders are generally accepting witin 80% of the "market value".

Never pay more than you want and I try to never get into a bidding war...you will always pay too much.

The "rule of thumb" in a ...

Sat, 04 Jul 2009 15:51:00 GMT

The "rule of thumb" in a "falling market" is to not offer anymore than you could sell the house for in 2 years, but that if you really want the house and it is priced 40% below present market value in order to get it to move quickly, you better offer enough over "asking price" and "terms and conditions" to at least get your offer looked at. (The TERMS may be more important than the PRICE).

The 80% rule only used to apply when prices were reasonably stable and CMA's of most realtors were in the same ball park, and there was sufficient demand to move properties quickly, and that owners acually priced their listings on the CMA's. The 80% rule does not apply at all in the present economic enviornment.

I agree with the prior answer, ...

Sat, 04 Jul 2009 15:15:00 GMT

I agree with the prior answer, in general.However, there are times when Sellers have priced their homes above the market & have many showings, but no offers for months at a time. In those situations, ask your Realtor to check the County real estate records to see when the Seller has mortgaged the home & the amount of the mortgage(s). If there is no possibility of a Short Sale, and especially when the home is vacant, then you can bid a lot lower than 80% of the listing price without insulting the Seller.

As a Buyer, you & your Buyer's Agent, need to do an analysis of each home you are considering, as each home purchase is unique.

The best rule of thumb is ...

Sat, 04 Jul 2009 14:32:00 GMT

The best rule of thumb is to completely ignore the asking price, and bid what you think it is worth to you (unless that is more than the asking price.)

No, it depends on the situation, ...

Sat, 04 Jul 2009 13:38:00 GMT

No, it depends on the situation, location, etc.

Generally, speaking, you can usually assume the asking price is 10-20% higher, but sometimes you might not get the property even if you bid the asking price.

I would base my bid on how nice the property is against the surrounding homes. If it's average and doesn't stand out, I'd go with 20% under or even more. If it's exceptional and newly listed (or recent price drop), I'd consider paying the full asking price just to lock in the deal before someone else makes an offer.