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
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.
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 I would suspect an 'unpublished' reserve may have been in place.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.
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.
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.
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.
"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!