Foreclosure in Hopkins>Question Details

Photo1, Home Buyer in Hopkins, MN

How low sould my offer be as a first-time buyer on a Bank Owned Property that has been on the market for almost a year?

Asked by Photo1, Hopkins, MN Sat Feb 12, 2011

I am looking at buying a Bank Owned Property as a First Time Buyer. The property has been on the market for almost a year, it has new carpet and paint and is a Townhome. It is listed for $76000 and there are a couple others in the same area around the same price. I am thinking of $58000 initial offer $1000 Earnest money and they pay closing (possibly). I expect a counter obviously. The house mainly needs a Hot water heater. Everything else in the house looks good and a friend that has inspected houses said it looks like there would be no issue passing minus the water heater. I have done alot of research but would like more suggestions. Thanks :)

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Hey, Photo1!
You need an agent. You are a first time buyer and you don't know what you don't know. Having a PROFESSIONAL representing your best interests will, most likely, cost you nothing out of pocket. There's only so much we can address here in this general forum. We don't even know where the house is to advise you whether or not this seems like a fair price or if there have been lots of multiples in this area, or a dozen other issues that need to be researched and assessed by the professional in place to represent your best interests!

Do yourself a favor, seek out an agent who represents buyers. It will do you a WORLD of good when you negotiate this deal.
1 vote Thank Flag Link Sat Feb 12, 2011
You need to find out wehat other homes in the area have sold for and if there are other offers. I find that when a bank lowers a price significantly, it often creates multiple offers. Contact a realtor to help you with this offer.
0 votes Thank Flag Link Tue Feb 15, 2011
Apparently I'm the only agent so far that has actually looked up the property on MLS. (There's only one townhouse listed in Hopkins @ $76,000 so it's kinda easy).

True, it's been on the market almost a year, but that was when the homeowner was attempting to do a short sale. The property went into foreclosure in 2010 and went back to the lender in January 2011. Essentially the clock has been reset to 31 days (which is how the bank sees it and how they determine their method of calendar mark downs).

There's an assessment balance of $1,436 which may or may not be paid by the bank - depending on how the purchase agreement is written and the restrictions on the assessment itself. These assessments were popular in the western suburbs to pay for repairs where associations didn't have the money. One thing you should check is if that is the sum total of the assessment or whether that is just one years assessment on a multi-year assessment.

Association dues are in the high range @ $303.00 /month, especially since this is a townhouse and you're just getting garbage, snow removal, lawn care and water (no electricity or gas). Oh and no pets.

My guess is the first markdown might be 10 percent and should be occurring soon as the property has been on the market for 30 days. You can wait it out and hope for more mark downs but there's no guarantee it won't sell before dropping to what you want to offer. (In other words I would guess - and it's a guess - that if you wrote an offer tomorrow you could ask for 10 percent off and get the deal - but ask for more as they will counter offer).

The most recent sale was 1284 in Oct 2010. It's larger and nicer and sold for $110. A similar unit to this one sold in 9/2009 for $68,400 (which is where I would guess the agent got their comps). But since that time period, average sale prices have dropped around 5 percent in Hopkins.

As always, rely on your agent to get you comps - albeit there isn't much out there to compare and then you can decide what to offer. The worst they can do is say no.

See link for agent specifics on writing an offer. This will give you a clue as to how difficult these transactions can be and how you must move FAST and jump HIGH when they tell you to.
0 votes Thank Flag Link Mon Feb 14, 2011
your odd of winning at 58K is closer to NIL than 50/50 :)

You said you have done a lot of research then let me ask you: what is the LOWEST comparable sold home within 3 months and LOWEST current Listing ? if you are 10% lower than the lower of the two, then you are wasting your time.
0 votes Thank Flag Link Sun Feb 13, 2011
Have your Realtor do a CMA for you. You need to know what other similar homes have sold for. If you are not using a Realtor, you need to re-think that decision. Your Realtor can help you with this question.
0 votes Thank Flag Link Sun Feb 13, 2011
The list price is merely a starting point, but not necessarilly the value of the property. you can offer low or high ----but there is no correct answer to this question unless one know the market values of the propert in the immediate area, how much the bank foreclosed upon the house, etc.

Get a realtor on your side to help you research the information you will need to make an informed decision. What have you got to lose? You have a lot more to gain getting professional advice from a seasoned realtor to does this kind of work day after day/

Good luck!
0 votes Thank Flag Link Sat Feb 12, 2011
It's so important to have your own representation. The most suited agents for bank owned homes are agents that list REO's and can speak intelligently with first hand up to date knowledge of how asset managers have been responding and how likely they are to respond to the various offer scenarios you are considering. If the agent you have representing you knows you well and understands your objectives and isn't just out for an "easy paycheck" that person is by far the best person to get your advice from. Best of luck! If you would like to discuss why it is a bad idea to not have your own representation on bank owned properties and short sales give me a call anytime.
0 votes Thank Flag Link Sat Feb 12, 2011
best to find out if there have been other foreclosures in the townhome association and what those units have sold for and when. The most weight should be given to others that have sold while this property has been listed, since those buyers most likely saw this unit as well.

Also do research about price drops on the property, when and how much. Have your agent do some digging.
0 votes Thank Flag Link Sat Feb 12, 2011
I agree completely with all the answers below. Get a value of the home and decide what it is worth to you also. Please keep in mind; you might only get one shot to offer on this property. Sometimes other offers come in and you don’t get notified. If you feel you have other options to buy similar properties then going in with a lower offer hoping the bank will counter might work (presuming they will counter you). That way you won't be upset if you lose the home to a better offer.
0 votes Thank Flag Link Sat Feb 12, 2011
There are no set standards as to how much below list price to offer on any listing--therefore review comps with your agent, recently sold similar properties in the immediate area, then make a determination as to a fair offer.
0 votes Thank Flag Link Sat Feb 12, 2011
Hi Photo1,

I would check the comps and speak with your realtor. Like Patrick said, if you go to low they may not even bother countering as asset managers tend to get "insulted" over low ball offers without considering ow realistic they maybe.

Another good point Patrick said, the property may have to be insurable if your using a typical FHA loan.

Good Luck!
0 votes Thank Flag Link Sat Feb 12, 2011
$58,000 less seller paid closing costs is really low and I doubt the bank would even counter that offer. You'll never know until you try however. Also, if you're going to use an FHA loan, be sure that there is nothing that would prevent it from appraising. The missing water heater may prevent it from FHA financing and the bank most likely will not replace it. There are a number of other things you'll want to watch out for so I would suggest that you work with an agent that has plenty of experience working with bank owned homes.
0 votes Thank Flag Link Sat Feb 12, 2011
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