on your last bit of info that you provided below; if the house has been vacant it typically should not matter BUT be sure you go in to preview the house well (this should be easy if listed with an agent). Also, if you are ready to buy, get a buyers' agent on your side (someone savvy with foreclosures if this is the type of property you want to buy) to help you, this again is at no cost to you, so be sure you are represented (talk to a few and see who you "click" with). Let us know how you make out. Best of luck
As far as me being in over my head Louis Wolfson, I wouldn't totally diasagree with you. However, what I'm doing here is just some initial research to hopefully mitigate that.
Also, I'm not thinking that they're, (to paraphrase Terry Farnsworth), "just wanting to get rid of this property". I do think it's a fairly competitive price for the market value of homes in the area. I just know, as I stated earlier, there's some initial work to be done. With that said I didn't know what to expect in way of knowing what to offer, what to expect, and what avenue's I had at my disposal to educate and ready myself, as I'm not at all experienced with foreclosed properties.
One last bit of info is that I know it's been empty for at least a year now....not sure if that matters at all.
I'm just looking to find out what and who I need to be thinking about \ doing \ looking at \ hiring, etc...
This thread has definitely helped me get started with that. Thanks again everyone.
There are common and approved methods for making decisions.
If you must rely on others for experience, choose the most experienced professional available.
First - go into the property, preferably with a professional (contractor) who can put a dollar figure on the fixes needed AND the fixes you want.
Assess the level of expense, time and involvement that this will take.
Decide if it is within your personal comfort level.
No "deal" is so good that you cannot walk away.
Ask a local lending professinal to give you a verbal valuation of the property with the improvements you are planning to make.
Ask if they will make you a loan to do the work and the eventual end loan.
Assess the costs, the possibility of the use of the end project, the time involved, and the comfort level.
Now add 35% to the cost and 50% to the time and re-answer.
(Please note: when you choose an answer as a Best Answer, or at least give a thumbs up, it helps those who answer questions here.)
I would be pre-approved first too even though your house is worth 100K....you always want to have that ready just in case.
Best Of Luck
Real estate is a game, if we all knew what a home would sell for or how high or low the market will go we'd all be rich.
What makes you think a foreclosed property is better than one in great condtion that you can negotiate a great price on?
As to what to offer. First you should be familiar with the market you are going to make an offer on. That way you have a sense of value. 2nd when a home 1st comes on the market it will command the highest price (typically) If there is more than 1 interested party you are competing with you must put your best foot forward as I suggested below. If you are the only one interested and making an offer (no matter how long it has been on) you can offer as low as you want and negotiate up. A good agent such as myself can contact the listing broker and feel them out as to what if anything they may consider (ie: mr broker I have a client interested in the property it is out of there price range and I dont want to waste your time or there's but would it be worth submitting an offer of x? )
Another thing you need as a buyer is a pre-approval letter. Do you have one?
Just remember because a property has been on the market for a long time with no offers, all of us agents have seen that all of a sudden when their client makes an offer all of a sudden there are multiple offers, no rhyme or reason.
Just to follow up - honestly your best bet is to contact a real estate agent who can guide you through the process. Call be biased, but it doesn't cost you anything to you one (their commission is paid by the seller), and foreclosures can be a little tricky - due to the fact that most banks will make you sign a contract addendum that releases them from any and all liability. You agree to purchase the property as-is, and there are often hefty per diem fees should you not close on time (assuming you finance) as a result of being unable to secure a loan. Additionally, an agent should be able to ensure you hit all your contingency dates as applicable per the contract. The banks have teams of lawyers and real estate professionals working hard on their side, and you should as well.
As far as the work that needs to be done - you'll need to weigh this into what you pay for the property. If the market value of the properties in that area are 180K, the home needs 20K worth of work, and you get it for list price (130K), you are still getting a nice deal - provided you are willing to deal with hiring people to fix everything. You should have an inspection contingency/period (generally 5-10 days) in your contact which will allow you to back out of the deal, should it need more work than it's worth as determined by a home inspector/contractor.
Step 1 â€“ Define a clear view why will you be acquiring this property (investment prop., to live in it, etc.), and ask yourself if you are up to dealing with work needed to put the property ready for living in it (time wise and character wise). Some people would prefer to buy a moving-ready property to avoid all the hassles of repairs and renovations, etc.
Step 2 - Hire a real estate agent in the area (better yet an agent who is a Realtor too).
Step 3 â€“ Put together an estimate (worst case scenario) of how much you would have to spend to get it up to living standards. If it looks pretty beat-up from the outside very likely the same will be inside. Then consider purchasing price as well as estimated value after repairs. While doing this keep in mind you could apply for a 203K renovation loan to help you purchasing the property.
Step 4 â€“ County assessed value is just for paying taxes. So it may not be a good indicator of market value. However, it may be possible that after repairs the assessment will increase increasing your property taxes. So keep that in mind during your due diligence to make a purchase.
Step 5 â€“ If you will be purchasing this as an investment, do a ROI analysis (return-on-investment) to determine if it makes sense to get into this deal.
Lastly, watch out that if it is an REO property, banks only offer a free-and-clear property title and you will be responsible for all and any expense needed during the process. Expect very little negotiation going back and forth.
Many homes in the condition you state may not qualify for a loan, that said there are 203k loans that may be available for the improvement of the property.
I recommend that you do the following
1) get a buyers agent - they will help determine value
2) Make an offer (even if its full price) Offer should be subject to a) home inspection b) financing c) mutually acceptable purchase and sales agreement (reo property addendums usually can't be changed)
3) have the home inspected (also have a mold inspection)
4) renegotiated based on inspection (or walk based on outcome)
5) Have a good real estate attorney
The assessed values typically lag behind market values as they take into consideration the past. In your case how do the assessed values of the other properties in the market that you say are worth 180-200k compare to there recent sales (if any)?
assessed and market value are independent and different from each other, although some may use it as a "guide". Your best action is to get a knowledge agent or Broker to help you is the purchase and this is at no cost to you. Get some one that has experience with foreclosures and working with lenders as these type of sales are different from the "standard or regular" ones. If we can be of further assistance, let us know firstname.lastname@example.org
Your offer should really depend on what properties comparable to the one you are interested in, sold for recently. Although you mentioned the home needs work, if the properties around it are truly worth 180K, then the entity that owns the property probably is not going to budge much off their asking price. I work with a lot of buyers, and unfortunately, many of them listen to their favorite uncle, or friends who continually tell them that "banks just want to get rid of these properties - lowball them with an offer at 50% of asking". The reality is - most of these properties have already factored in the discount to the asking price - and the vast majority of them end up in a multiple buyer bidding war....selling for list, or sometimes above list price.
Hope that helps!
You could bet that the LISTING PRICE will include allowances for the repairs; but you shouldn't bet your savings on it: Have your Realtor do a CMA to determine the Market Value.
You can talk to your Mortgage Broker about leveraging your present house.
Good luck and may God bless