Foreclosure in El Cerrito>Question Details

Hope2buy, Home Buyer in Berkeley, CA

How can I determine what to offer on a bank-owned/REO property?

Asked by Hope2buy, Berkeley, CA Mon Jul 27, 2009

What steps can I take to figure out what a good offer price is on a bank-owned home-- an offer that is high enough that it will look attractive to the bank, and low enough so that I am still getting a good deal. I am looking in the Berkeley and El Cerrito markets, and have experienced a lot of buyers/competition and multiple offers on single-family homes in my price range. We are now looking at a foreclosure-- it looks like it sold at auction in the high $300's, but was listed on MLS for mid-$400's. How do I determine what a good offer would be and how can I make my offer stand out from others?

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Not sure the experience of out-of-the-area responders is exactly on here. Realize that in the desirable neighborhoods, REO's frequenty receive multiple offers - probably more offers than pure owner sellers - many times over 20 offers - 6 is not unusual.

All cash buyers go to the head of the bank's line, even ahead of a lower offer from someone who has contingencies for loan, appraisal, or whatever. If you're not an all cash buyer, make your offer as contingency-free as possible and be sure to have a pre-approval letter from lender. The bank wants it sold with as little risk, expense or difficulty to them as possible.

Finally, make your offer quickly - the first or second day on the market. If it's a strong offer, the bank may just decide to sell it to you and be done with it. Waiting is never to your advantage.
1 vote Thank Flag Link Tue Jul 28, 2009
You did not mention what your reason for purchasing is...personal home, or investment property. Sounds like you may feel that a "good deal" is defined by getting it for less than the offer price, or that the sale price should be related to the auction price. It's not, so don't let yourself get tripped up and miss a great opportunity. My advice is to look at similar sales of homes in recent months by private sellers, rather than foreclosed properties, and make adjustments based on repair costs. Don't get hung up on the list price, but determine, with your agent, the real value of the property in today's market. Even bank owned properties are often receiving competitive offers, and you don't want to miss out on the opportunity all together by being so cagey that a quicker buyer snaps it up.

If it has been on the market for a while and there are no offers, then it is overpriced. Offer what you think it is truly worth based on actual comps, and if they don't take it, move on to the next property. You can always keep an eye on it if the price drops.
0 votes Thank Flag Link Wed Apr 4, 2012
That is a really great question and also a common one. So common if fact that I recently wrote a blog post that addresses all of the considerations when writing an offer. See my link below to the blog post. Please let me know if it helps you to make a more informed decision.

Good Luck!
0 votes Thank Flag Link Mon Jul 27, 2009
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