Foreclosure in 33137>Question Details

Randy, Home Buyer in Miami, FL

How low can I go?

Asked by Randy, Miami, FL Sun Oct 19, 2008

I found a house that i liked - it has gone from asking price as a shortsale ( 320k) down to foreclosure asking (250k)yet there are other houses in there area - a little rundown, under 200. What guidelines do these bank operate under. The agent is very flaky - didn't even show up to let me and my wife in - twice -- so I cannot trust him but love the house?

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I would find a competent realitor and get recent prices on what similar properties are selling for. I would also look at the property tax records to see what the property has sold for in the past. With that information you should be able to come up with a reasonable estimate of what the property is worth. A bank officer wants to minimize the amount of the loss on the loan, so they want the higherst price possible. However, in this market, home prices are deflationary loosing 1-3% per month. A rational loan officer needs to balance your offer against the probability of selling the home to someone else at a higher price. In addiiton, the banks must have some carrying costs on the property that they can avoid by selling it.

If the $200K houses are not selling, that tells me that they are overpriced also. That is why it is so important to know what similar houses are selling for (not what the asking price is). My advice is to offer them 30% below the $200K price and see what there counter offer is. If you follow the news, you know we are in a recession. A recession that is predicted to be long and hard, if this is true home prices will fall even more. Also even when the recession is over, people's credit ratings will probably have taken a beating also, so it will be difficult for them to qualify for a loan. On another blog here a real estate agent predicted that the price of homes will fall to 1999 levels before the market bottoms out. On average, I agree with this prediction. We a suffering from a triple whammy: 1) Busting real estate bubble, 2) A bad recession 3) People soured on real estate or cannot get a loan.
1 vote Thank Flag Link Fri Dec 5, 2008
You can give any offer you want and the agent may not respond right away. I experienced this when I bought my home this summer and the agent's actions cost the bank an additional $45k. My offer was ignored even though our credit scores were both over 800, we have more than 20% down, and it was actually higher than the one accepted (we found out through another agent in their office). When that deal fell through due to financing issues, they did not call us back and it ended up going through auction (this is a bank owned auction, not foreclosure auction). We ended up getting the home for $45k less than our last offer ($385k final price). The selling agent chose the other offer because it was her client (both sides of the commission). There would be no other reason for it since we were the stronger candidate with a higher offer. You will experience this from certain agents who are getting desperate to squeeze every last dollar from every sale since the boom they helped create burst on them too. To be honest, I don't even think the bank was shown our offer since they didn't recognize the fact that we (the auction winners) were the highest offer they received during the regular MLS sales process. Also, not all excellent deal foreclosures are run down. Ours was built in 2005 and everything was in great shape and originally sold for over $600k when built brand new.

Here's one techique to know what is a good price (where's the bottom). For my home, comparable homes built in 2001 were sold for around $350k. This was a year or two before the market started to explode. I feel comfortable that homes will not dip below that amount. You should see what your home would've sold for in 2001/2002 and if it's almost down that low, you will be safe. 2003-2004 prices would be cutting it close and 2005-2006 prices would be unrealistic to consider buying.

Now, as for how low you can go... It's more important to say how HIGH can YOU afford to go. When purchasing out home, we decided on what rental values were, what we needed in a house and what we were willing to pay per month regardless of market value. The following should help you make this decision.

What would that property rent for and what are the taxes? There is a simple calculation you should make to ensure that even if prices go lower, you will not be one of statistics that can't afford their homes.

Take the amount of the home, assume you will get a home loan for 100% of the value and for every $100k, multiple by $600 and that will be your approximate monthly cost + taxes. If the market rent is higher than that, then you have a good deal. If not, why bother BUYING, when renting would be more financially responsible. Don't buy into the "but you will build equity" speech. That's how people got into this mess. Would you rather spend $2000 in a home loan SLOWLY building equity (assuming prices remain stable) or $1,500 / mt on rent where you SAVE $500 (CASH equity) per month?

Example for what you are looking at. $250k value (let's assume that won't budge).

2.5 * $600 = $1500/mt
Taxes (assuming around 3%, which is high) = $7,400/mt = $600/mt
Insurance = $480/yr = $40/mt
Total Cost of ownership = $2,140 (Not including maintenance / repairs)
I don't include utilities since you pay that regardless of renting or owning.

So if the market rent for that home is MORE than $2,140, then go for it since you can always rent it for more than you're paying for it. If not, then you need to consider if it is worth the premium of OWNING vs. letting someone else be responsible for major repairs (roof, driveway, boiler, HVAC, etc.).

While you do get a "tax credit" for the loan interest and taxes, considering that you would be paying $24k/yr, since you're married, it would be only $13k in benefits since the standard deduction is ~$11k. The exception is if you have a lot of itemized deductions. From what I know, Florida has no income tax to deduct, so you would be limited to sales tax and very specific expenses for itemization. You also have to consider the tax bracket you are in. I will just ASSUME (since I have nothing to go by other than the price range of the home you are looking at) that your household income is around $60k/yr. At that rate, you are in the ~15% tax bracket. At MOST, you would save $320 in tax benefits. That would be only if you already have $11k in OTHER itemized deductions.

I frown upon using that tax credit to justify a purchase because if you decide to rent it out, you no longer get those tax benefits and you will end up paying more than what you're getting for rent.

I hope I was clear enough and this helps you make a decision. Whatever you do, I wish you and your wife have a happy life together no matter where you call home.
1 vote Thank Flag Link Thu Oct 23, 2008
Hi Randy,
Rule number 1-- never love a house, it's not even alive, and there will be others that you will like. Wait another year, save another 20%. There'a about 120,000 houses/condos for sale in this area, and more coming. Make your offers extermely low. If no takers, on to the next one. Good Luck
1 vote Thank Flag Link Mon Oct 20, 2008
The only I can add Is I have a lot of cllients because others realtors can not close any deals for more than 6 or months or more; you need to be smart; you need to think in a good deal for both bank and customer. simple; by the way I have a short sale aproved in 165k 3/2 in 14484 sw 143pl old mls listing D1332436; I will post this listing in one week ; in average I sold or rent my listing in less one week. Also I can start short sales for bank of America in the new web site http://www.equator.com; but only with both parties buyer and seller

Note: the cma is with distress sales
0 votes Thank Flag Link Thu Dec 10, 2009
Hey Jaime,

Isn't thats what you told everyone 5, 4, 3, 2, 1 year ago. Going by CMA is like asking for hottie from your highschool for a date 20 years later and expecting him/her to remain hot.

CMA is a wet dream for losers (sellers and realtors).

Only way to determine the price of property in Miami is to go back to 1999 - 2000 price level. Like it or not - that is the PRICE TODAY not what was in 2005-2007. Many got conned in believing in this CMA and ruined their lives, not many are going to get conned now.
0 votes Thank Flag Link Thu Dec 10, 2009
first at all you need to do a CMA ; you need a good comparable get a seriuos firm in aprraissals; do a ppraisaal a make an offer in that price
Web Reference: http://www.jaimezuluaga.com
0 votes Thank Flag Link Wed Dec 9, 2009
Randy,

What is the price of the house now? I am sure the agent still tells you that there are multiple bids on the house!
0 votes Thank Flag Link Wed Dec 9, 2009
all depens for number of the offers and the amount this is the key
Su realtor tiene q tener el sentido comun para saber cuando hay ofertas
hablando con el listing agent debe tratar de negociar lo mejor para usted
sisu realtor piensa en como sacar mas comision no lo puede hacer
esa es la parte del exito
0 votes Thank Flag Link Sat Dec 6, 2008
Profesional Realtor Are very INterested in Sale the House; The ""problem"" is the bank; the asset manager is who take the desicion; you need to think like this guy; because he is resonsabile for the sale; all people in this bussines try to do the deal quickly; if the property has a few days in the market it very dificult to do; unlees you ofer full price, it depend for every property, it is Common sense;
0 votes Thank Flag Link Fri Dec 5, 2008
Jaime,

I am little confused. Is the market so strong that the buyer has to beg the seller to sell the property? i thought the banks are in such a deep trouble that they are going out of business and asking the taxpayers to bail them out.

I have not seen a single REO property which does not have a realtor assigned by the bank.

Why that licensed realtor would not be interested in marketing the property and getting his / her commission quickly instead of spliting with another realtor?/

Please help me out to understand.
0 votes Thank Flag Link Fri Dec 5, 2008
Buy Foreclosures it is not Easy; Realtor with experience can check if the bank received your offer. You can ask to your realtor how many days the property are in the market ? I dont think the realtor sell the properties to realtives; they are to many in South Florida, BUt when the properties has morre than 150 day in the market theuy have a good price sometimes I see 9 offer for a propertie, by the way in Boca raton or port saint lucy I see by my self in the last month November Sold 90% inventory for Countrywide in this cities; you need to be patient, have Inventory and try try try I have client for one Year or one Week nobody Know; Only the Client have right Check this page http://english.vivareal.us/community/jaime.zuluaga/ I can send more links for get Reo Properties, BUt the best way IT Is get a Real good work Realtor this is the key.
For Example I have a propertie with 309 days in the market 4000Sqft 5b 3car garage 2 storys asking price 409K, the bank reduced the price to 338k I send a Offer for 260K Cash I received a Counter offer for 332k; My client try to counteroffer inmediatly 270k I say wait one week ; Yo know what happend !!!! the bank put the property Asking price in 308K in one week 7 days I say To my client wait more; But I dont have the last word; Other person can buy this porpertie but this is my way, Im waiting for one week; this is my way You need to be very smart and Patient to get a good price for the client thast the way to make money
0 votes Thank Flag Link Fri Dec 5, 2008
I have come across many agents (REO properties) who do not want to sell the properties in order to force the banks to reduce the price further. Idea is to bring the price below market value and have his /her cousin buy the property for flipping. It is number game. In the casinos, they have security watching dealers.

In this market, most sellable houses in Miami (REO) are not for sale but house without roof is for sale for over a milion dollars.

Go to county records, look up the owner (Bank) and send him a letter by certified mail with copy to your senator, Congress person and Governor Crist. Mail a copy to the realtor.

You may get the house.
0 votes Thank Flag Link Thu Dec 4, 2008
For me its different I closed 4 deals in the last two weeks; only bank foreclosures; because I learn for the last year how to buy foreclosures; only Houses Single Family Resident, NO CONDOS. I can send directly my offers to IndiMac, Fredy, Fanny, Wamu, Country.., etc that's Mean Experience, 1 tell to the client it is not ease; 2 the client need to have the loan ready "VERY IMPORTANT"; 3 find the Property, "THAT'S MEAN RESEARCH ASK TO THA BANK IF STILL AVAILABLE, TRY TO KNOW HOW MANY MONEY ACCEPT THE BANK; YOU NEED TO DO A cma VERY GOOD; YOU NEED TO KNOW IF THE BANK GIVE UP SOME SELLER CONTRIBUTIONS;ALWAYS 4. SHOW THE PROPERTIES TO THE CLIENT; 4 MAKE AND OFFER 5.CHECK THE OFFER WAS SEND TO THE BANK 6 WAIT ONE WEEK MAYBE TWO 7 CLOSE THE DEAL .

THE AVERAGE TIME ITS BETWEEN 12 DAYS TO A MAX 1MONTH YOU NEED TO TELL TO THE CLOSING AGENT YOU ARE TO TRY TO CLOSE VERY FAST; BEFORE CLOSING DATE; WHEN I RECEIVED THE OFFER SIGNED FOR THE ASSET MANAGER I ALWAYS TRY SURVEY, APPRAISAL, HOME INSPECTION IN ONE DAY YOU HAVE THE ALL DATA IN THE NEXT THREE DAYS, THE REST ITS WAITING FOR THE LENDER BUT NOT MORE THANT 2 WEEKS; I HAVE PROBLEM WITH UTILITIES FOR HOME INSPECTION BUT YOU NEED TO WORK HARD IN ORDER TO BE SUCCESSFUL. SOME REALTORS SAY I DO MIRACLES
AND THE BEST PART MY CLIENTS START WITH EQUITY THE PRICE ITS ALWAYS 80% OF THE APPRAISAL "AVERAGE"
0 votes Thank Flag Link Fri Oct 24, 2008
I am assuming you have an agent representing you? If not I would start there. With buyer representation you will have someone working on your behalf that can help with this question. Your agent will be able to pull the most recent sales for you to compare this house to. At that point you can determine what you and your wife are willing to pay. There really are no general guidelines that the banks operate under. They are obviously interested in minimizing loss and still getting the house sold. How much of a loss is acceptable depends on so many factors.. time of year, how long they have carried the house, how much the loss is, condition and location of the property, previous offers. There is no simple equation. Good luck!
0 votes Thank Flag Link Fri Oct 24, 2008
Randy, the counter offer format will be told to you multiple times to stall. My suggestion is to stick with what you are completely happy with (i.e. no chance of buyer's remorse). The government bailout is only delaying the inevitable. Too many people are WAY over their heads, regardless of "repackaging" of the loans. Some are already on the 40 year terms. If they allow 50-60-70 year terms or longer "interest only" loans, we're only making it worse. The market really needs to correct and correct fast then it will build up again once people get greedy again. Gotta love America, where the American dream is built on making something out of nothing. =P I actually refused to actively sell homes for the last 2-3 years because of where I saw the market. The only sale I did (reluctantly) was late last year, but only to a friend who is very well off and the home is mid-market priced (wasn't overly bloated). This was not a transition home, starter home, or investment. This was for them to live out their lives there. It is large enough in case they have a family, but affordable enough that even one of them could afford the payments and living expenses if need be. We're not all in their situation, but it's a wise plan.

Jaime, the broker did not require an earnest money deposit because of the way they operate (weeks before returning calls, etc.) Many of the Bank owned homes around here won't require it because they know they won't respond in time. They do however require proof of funds, pre-qualifications, and a signed contract.

I didn't persue telling the bank about their agent/broker because I am a Realtor myself and I'm sure you know we have a "law" that we can't say negative things about specific agents/brokerages. I also looked at it as a gift from them since I saved another $45k. =) I considered sending a card saying thank you for saving me $45k w/ a fruit basket, but I reconsidered.... =P

Another thing is the requirement that the selling agent must return an acknowledgement that the bank received the offer or to present the offer in person has not been honored by more than a few agents around here. By law they must abide by those requests unless they have a specific written and signed agreement where the sellers require all offers to be negotiated by the agent. When you do submit that offer, have your agent put that clause in the contract as well as a seperate acknowledgement page requiring the bank officer to sign and return within 48 hours. Technically all offers must be presented within 24 hours (1 business day in NJ, varies by state). If either of those terms are not met, you have legal basis against that brokerage. It would be up to you to decide if it is worth persuing. Honestly, I would love for people to stand up for their rights so less of the newly licensed (joined because of the boom) and highly unscrupulous agents would be relieved of their licenses by the state. Many of these same agents are the ones that convinced buyers that they can make money because the market is going up. There are many guilty parties in this mess, but now the conservative savers can take advantage of the moment.
0 votes Thank Flag Link Fri Oct 24, 2008
Thanks pipl still reading your great replies -- very helpful. I did call Aurora but they gave no advantage - only stating that it's still an offer-counter offer format. _- the other house that I was interested in dropped by 20% this a week! ---- strange mix of worrying and positive.
0 votes Thank Flag Link Thu Oct 23, 2008
David You Are Right!!!!!!!!!!
""""The selling agent chose the other offer because it was her client (both sides of the commission). There would be no other reason for it since we were the stronger candidate with a higher offer. You will experience this from certain agents who are getting desperate to squeeze every last dollar from every sale since the boom they helped create burst on them too. To be honest, I don't even think the bank was shown our offer since they didn't recognize the fact that we (the auction winners) were the highest offer they received during the regular MLS sales process. Also, not all excellent deal foreclosures are run down.""""
Did you check what bank it's the Owner????? Did you check if your offer was received in the Bank???
I have the same experience before with my own clients. My offer disappear never arrive
0 votes Thank Flag Link Thu Oct 23, 2008
My guess is there are no guidelines. That back may have polices but in todays market
they are changing by the week.

Second problem, banks are being flooded with calls and offers on 'your' type properties.
They don't really have the staff to handle the huge loads.

Bottom line, falling in love with a shortsale home can be a rocky road.

Good luck!
0 votes Thank Flag Link Thu Oct 23, 2008
Randy, the most important concept for you to understand is that there are buyers agents and sellers agents. I would strongly suggest that you hire a buyers agent to represent you. There is a fee involved but a portion of that can be paid as part of the cooperating broker commission in the transaction, especially if the property is listed in MLS. The CBR representation is national, you can go to their website and look for someone who has taken the training. Also ask for references. A buyers agent has a fiduciary responsibility to you as the buyer and therefore will tend to be much more thorough finding out information on any house or neighborhood for you and your family. Dont worry about the title being held by Aurora, the property is listed so appropriate listing contracts must have been signed. Also dont be afraid to go directly to the owner of the company and let them know your dilemma with the agent if you like the property that much but remember that they will most likely be representing the Seller of the property. Hope that helped.

Douglas Montgomery, Broker-Owner HomeNY Corp.
0 votes Thank Flag Link Thu Oct 23, 2008
Randy

1. Hire an agent to represent you! An agent who doesn't show up in this market is not worth keeping!
2. How will you know the market has bottomed out? When the prices start to go up!
3. Make an infomred offer 10% +- below list and see what haapens.
4. Have a home inspection contingency and make sure the house is checked out top to bottom. Hire a professional inspectort that is either NASI or ASHI certified

Good luck it's a GREAT time to buy!

Joe
0 votes Thank Flag Link Thu Oct 23, 2008
Well Randy, You probably need to start looking for a better agent to start the process again. There's probably a lot of them in your area. Prices right now are what the buyers are willing to pay.

Good luck,
Charita King 562-276-8681
0 votes Thank Flag Link Sun Oct 19, 2008
COMPANY CONTACTS:
Terry Gentry
Managing Director
10350 Park Meadows Drive
Littleton, Colorado 80124
(720) 945-3110
tgentry@alservices.com

You can try this
0 votes Thank Flag Link Sun Oct 19, 2008
Thanks for your replies and the URLs
0 votes Thank Flag Link Sun Oct 19, 2008
Did you check what bank it's the Owner????? Did you check if your offer was received???
Buy foreclosures it is not ease; I have experience with reo in IndyMac, Countrywide, Wamu, Fannymae, Freddymac, each it's diferent, but normally only 4 firms in real estate in south florida has the listings, you need a real estate sales with experience or better who like to work hard.

Sorry my little English I can help you if you are in Dade, Broward or Palm Beach
0 votes Thank Flag Link Sun Oct 19, 2008
The bank or their Asset Manager is looking at numbers only. You can usually expect a 10% leway depending on the institution, location of the property, and the listing strategy. In a typical situation price drops usually occur quite frequently, but it will be a waste of your time to offer something much lower than 10% off the offered price (be patient). However if the location of the property is very good (or better), and this is an isolated foreclosure, and the subject property is in fair-good condition it could mean multible bids. To search for foreclosures nationwide check out the site below.
Web Reference: http://www.listhomemls.com
0 votes Thank Flag Link Sun Oct 19, 2008
Hi Randy,

Find an agent you can trust that will help you write an offer on the property. I know a couple of great agents in Broward County that I can refer you to if you like. Just let me know.

Check out my website for more information, free reports about buying real estate and for a free pre-approval.

Tony Croft
Mortgage Advisor
Web Reference: http://www.TonyCroft.com
0 votes Thank Flag Link Sun Oct 19, 2008
..( in continuation) the title is held by Aurora Loan Services (Lehman Bros) -- anyone got any suggestions please?
0 votes Thank Flag Link Sun Oct 19, 2008
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