Foreclosure in Kenwood>Question Details

Annuka, Home Buyer in 55419

Buying an REO foreclosure

Asked by Annuka, 55419 Sun Mar 2, 2008

We are interested in putting in an offer on an REO property but are unsure of what type of offer to make. The house is listed at 205,000 and has been on the market for about a month with no other offers that we are aware of. We are extremely interested in getting this home but do not want to place to high of an offer. Any ideas on how to place an REO offer, HELP!!!

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Ask your agent to check with the listing agent to see if there have been other offers and if the bank/seller has countered them, and if so, at what price (net). Some listing agents will not respond to such an inquiry, but others will, so you may or may not be able to find out. But if you can find out, this is good information to have.

A lot of this decision depends on how heart broken you will be if you don't get the house. If you absolutely love the house and will just die if the offer is turned down, then offer close to the asking price. Make sure you insist on an inspection period and find a really good inspector. That will give you some idea of how much it will cost to repair (if repairs are needed). Asking for the bank/seller to pay some of the closing costs, provide a home warranty, and closing within 30 to 45 days (or even sooner) is likely to be something they will agree to, but if you give them a lowball offer, they may turn it down or come back with a counter-offer (which isn't a bad thing). If you offer gets turned down, you can submit another offer, but someone else might also beat you to it.

Since this is spring and we are just now entering into the prime real estate season in Minnesota, banks/sellers are not very likely to agree to a lowball price on a REO that has just been on the market for a month.

That may change later in the year when the season is over (September) and when it has been on the market longer, but right now, they have no incentive to sell for less.

Remember, banks/sellers have had this property evaluated by at least one independent real estate agent who is experienced with BPOs and the cost of the repairs have already been figured into their price. They will have a specific net amount in mind that they need to get for the home and they know they are very likely to receive more than one offer on this home if it is priced right and in decent condition.

If you are using FHA financing, remember that not all REOs will pass their inspection requirements and your agent may need to negotiate with the seller to have some repairs made so that FHA financing can be used. That can affect the likelyhood of the offer being accepted as well.

Good luck and happy hunting!
0 votes Thank Flag Link Thu Mar 19, 2009
Whenever you place an offer on a foreclosure you need to have good handle on what repairs and updates need to be done and what the cost of the repairs & updates will be. You will also need to know what similar homes are selling for, your buyers agent should be able to help by providing a market analysis. In addition to the repaire costs there are other factors that you need to consider, I suggest downloading the free report from http://www.MIforeclosureDeals.com The report is general enough to apply anywhere in the country. It's free and can save you some money and a whole lot of headaches.

Good Luck!

Gordon
Gordon@MIforeclosureDeals.com
0 votes Thank Flag Link Tue Apr 22, 2008
Annuka......

I just posted some information on buying REO's on another thread, as have many others. Be sure to search MN questions and answers, there is a lot of good info out there.

Thanks, Todd Norsted
Web Reference: http://www.toddnorsted.com
0 votes Thank Flag Link Mon Mar 3, 2008
Your agent should be able to guide you in the right direction. The link below has some pretty extensive information about the offering process. Although it is from Riverside County, the information can apply anywhere.
0 votes Thank Flag Link Sun Mar 2, 2008
First thing is first... talk to your agent!

Foreclosures do sell at a discount to the general market but keep in mind that another buyer could come along at any time. Determine what a fair market price is, then reduce from there. If you get too greedy, you may lose the house to another buyer!
0 votes Thank Flag Link Sun Mar 2, 2008
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