Foreclosure in Philadelphia>Question Details

JB, Home Buyer in Philadelphia, PA

Home went to auction at an opening bid of $9000 but did not sell...it's now listed at $39,000..will I be able to offer closer to the $9000??

Asked by JB, Philadelphia, PA Thu Aug 11, 2011

also it looks like fannie mae still has the peoperty as opposed to it being a REO is this odd?

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Starting auction prices are just that. Starting prices. The seller expects the price to go up as bidders get carried away with the idea that they are getting a bargain. Sophisticated buyers know when to stop bidding. The house did not sell which means the seller did not get an acceptable price. There was a minimum, called a reserve, which the price needed to hit for a sale to take place.

Now that the house is listed for sale, the seller is trying to get a market correct price for it. That does not mean that the price is achievable but I seriously doubt that an offer of $9,000 will be welcome.
0 votes Thank Flag Link Fri Aug 12, 2011
Dear JB,
If the bank was foreclosing in Philadelphia for $9000, they needed $9000 plus 'knock down' costs such as paid escrows, tax liens, water liens, legal fees, before they would be willing let someone out bid them at the sale. In this case the property went back to the bank and ended up with Fannie Mae. It is an REO either way.

Fannie had the property appraised to determine the present market value. They are selling at that number, and not to recover what was owed. Sometimes an REO's listing price is greater than what was owed and sometimes it is lower.

When an REO is listed for $39,000, they are looking for an offer that is close to that number. If no one makes an offer they will lower their listing price until they get to an amount where they get offers close to their number.

In this case, forget about the $9,000. If you are still interested in this property consider whether it is worth $39,000. If not look for another property.

Want to know more about buying in Philadelphia, you can contact me.

Kathleen Sheridan, Weichert, Realtors - McCarthy Associates
ksheridanrealtor@gmail.com
2 votes Thank Flag Link Fri Aug 12, 2011
JB,
Auctions are funny. I would suspect an 'unpublished' reserve may have been in place. This means the seller has already determined the minimal bid at which they would sell the property. The consumer can ask if a reserve is in place but the seller or auction house is not required to disclose the reserve. $9,000 for a single family home was a bit too good to be true. The low start bid is simply to get some action. However, behind the curtains of an auction, the buyer must truly be aware they are going into this situation naked. Be aware of the other costs that will be transferred to the buyer.

Bank owned purchases are more transparent, but be sure to read and understand every page of every addendum. The inexperienced buyer will be ambushed with some very unforgiving circumstances if they wade into this environment unprepared.
1 vote Thank Flag Link Fri Aug 12, 2011
JB,

There is often much that is taken into consideration between the $9,000 and $39,000 sale amounts. At auction there are no assurances that come with the property. This purchase may include a tenant/owner that requires eviction, the initial loan amount, liens on the property etc. that must be satisfied for the bank to dispose of the property.

Their $39,000 asking price is one that should also be a justifiable amount based on recent sales of similar property for this location.

The lender may be willing to move a bit on their asking price but for a recently listed property look for them to expect an amount close to or above their asking price.

Hope this is helpful.

Bill
1 vote Thank Flag Link Fri Aug 12, 2011
Try to put this into some context. 5 years ago it was probably selling for $75-80,000! At $39,000 it's still a huge bargain.
0 votes Thank Flag Link Tue Aug 23, 2011
Now that the home has been listed, the seller has indicated what they feel the home's value is by listing it at $39,000. They didn't take $9000 at auction and probably will not now or in the near future. You can make any offer you want now, but be prepared for a counter offer or complete rejection of your offer depending on how low you go.
0 votes Thank Flag Link Tue Aug 16, 2011
The opening bid at auction doesn't mean much. If someone had bid $9000, the bank would probably have bid higher, until they bid the price up to the minimum amount they were willing to accept. If no one bids their minimum amount, they buy it back. In this case it sounds like the bank bought it back for $9000.

I agree with Benjamin. You can offer what you like, but if the amount is way off what similar properties are selling for in that area, it probably won't be accepted.
0 votes Thank Flag Link Tue Aug 16, 2011
JB,

It completely depends upon the comparable properties in the neighborhood and on the block. Are other properties selling for $39,000 or $9,000? If other properties are selling for closer to $39,000 then the owner would not be doing the wisest thing to take your offer of $9,000.

All that said, I do not know all the extenuating circumstances that factor into particulars of this specific property. You can offer anything you like, it just may not be accepted.

Let me know if you need help with anything else.

Ben
0 votes Thank Flag Link Tue Aug 16, 2011
The seller is quite obviously overpriced at 9000 and cannot come to grips with that reality. Give the seller time to think better of it and the home will be had for under 9000.

"but I seriously doubt that an offer of $9,000 will be welcome."

Well the seller can watch it rot and pay the property taxes in the meantime. Lots of other boxes to choose from!
0 votes Thank Flag Link Fri Aug 12, 2011
Wait another year and the home may be had for $4000.
0 votes Thank Flag Link Fri Aug 12, 2011
You may offer whatever you want;

But, would YOU accept a $9000 offer for a $39,000 property?
0 votes Thank Flag Link Fri Aug 12, 2011
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