â€œâ€¦wise for me to subtract 20% from the homeâ€™s market valueâ€¦â€ You want to offer less that asking price and you want to subtract another 20% from what you perceive to be market value.
â€œThank you for your feedback,â€ you say.
You are not looking for feedback; you are looking for free advice. Here is my advice. Get yourself a local, knowledgeable Realtor to help you. You need help on pricing and probably other aspects of buying a home. And here is the part you will loveâ€¦it will most likely be free for you! The buyer will most likely pay the Realtorâ€™s commission. You get professional representation and someone else pays the bill. What a great country!
As far as pricing for future depreciation, well... That is a sticky situation. No one can predict what the future will hold. It could appreciate greatly in the next year due to a new company opening or sheer development in the area. There are lots of variables in this equation and the best thing to do is take all into consideration and arrive at a value that YOU feel comfortable with. It is futile to discuss anything more/less. It ALWAYS comes down to the buyers comfort level on a particular property.
There are plenty of choices out there. If this one gets away, there is a always another one just around the bend.
Negotiate HARD! It is a buyer's market and a unique opportunity for wealth building by entering the market during a depressed real estate cycle. The property is ripe for the plucking, have some fun with it!
Good Luck! I hope you find what you are looking for and that the property grows to be an astounding asset to you.
I avoid offering anything less than 20% below the listing price. It tends to be a waste of time. Lately, they don't seem to be going for any offers I've made less than 10% below lisitng price and many of the REO homes I've made offers on have sold for listing price or above! These are homes in the less than $150K range. I hear that higher prices homes are not getting the same competitive offers from buyers as the lower price range homes are experiencing. Keep making offers anyway. One will take.
All of these answers are offering you sound advice, but I have to wonder if you are going at this all by yourself (and why?). You can take advantage of professional advice and help by using a Buyer Broker, and it will not cost you anything!
A Broker has access to more information, and more up-to-date information, than you can find on the public web sites. We can compile a comprehensive price analysis very quickly which will give you a fair offer price--or at least a starting point. The bank already has an idea of what the property is worth, and they likely have a "window" within which they will accept an offer outright. If they have held onto it for 1.5 years already they either haven't seen an offer they like, or they are not being realistic about what the market will bring.
One word of caution, since the builder may have gone out of business there may be unpaid contractors who have filed liens against the property. Hopefully, the bank has settled all of that, but it is worth investigating. A Broker can request this information from a title company for you.
Whatever you do, have the property thoroughly inspected by a professional home inspector, even if you have to pay for the inspection. New homes have problems too, and when a builder walks away from a job you do not know what has been left undone, or wasn't done right in the first place.
In your offer you can still ask for items that are commonly paid for by sellers, such as an appraisal, survey, and even inspections. Whether or not the bank agrees to pay for them depends on their bottom line. Just like a private seller, they have a certain level of motivation to get this house off of their books.
The good thing about pruchasing an REO is that you will usually get an answer on your offer within days rather than months as in a short sale situation.
If you are serious about pursuing this house let someone help you (naturally I'll volunteer for the job). You don't want to make a mistake now and regret it for years to come.
Realtor-Coldwell Banker Legacy