Foreclosure in Grand Rapids>Question Details

Tjo0817, Home Buyer in Grand Rapids, MI

How much to offer on a foreclosure?

Asked by Tjo0817, Grand Rapids, MI Tue Oct 5, 2010

I'm a first time home buyer, and I am looking at foreclosed homes that are around $120,000-130,000. I would like to spend (in the end) around $80,000 for a home. Of course, less would be great, if I could do that. How low should I offer? Is there a percentage that I should stay around? I want to take advantage of a wonderful deal, but I don't want to make an offer that is way too low, I have no hope getting the house.

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Lisa and Goran Forss (Broker)’s answer
Short answer is to work with an experience realtor, especially one who is used to deal w foreclosures. We list bank owned properties but not in your area. Some banks list them in the middle of the price range, some at the bottom of the price range. An experienced realtor in your market should be able to guide you. Let me know if you need any assistance in finding one.
1 vote Thank Flag Link Sun Mar 20, 2011
Hello Home Buyer,
It is a great time to buy, with many good deals. Getting a best buy in today's market is challenging. And the best deals go the fastest. Having your own Realtor is essential. Find a Realtor, in the area where you are buying, that you can work with well. Sign a buyer agency contract with that agent. Under this contract, the Realtor will be working for you and looking out for your best interests. Do your own research because knowledge is power. Then, trust your Realtor to help you get the best price on that house.
0 votes Thank Flag Link Sat Oct 30, 2010
The first question I have is are you getting a mortgage or paying cash? The second question is are you planning to buy a foreclosure that needs alot of work? If so, get quotes on the work you want to have done. When you submit your offer have the agent write a letter listing the work the property needs and what you feel it will cost. Put in an offer that you and your agent feel is fair and see what happens. They will either accept it, counter your offer or refuse it. Even if they refuse it you can still write another offer on the same property for a higher amount. Someone just gave me an offer on one of my listings for 50,000 less then we were asking. I was a little surprised, but you never know what the seller will say. I had to present the offer.

Good luck!
0 votes Thank Flag Link Fri Oct 8, 2010
Hi

Will vary from bank to bank and the condition of the property, but generally a bank may consider an offer 10-15 percent below the listing price. If the property stays on the market for ususally 25-35 days (depends on seller) the price will be reduced by a certain percentage, then the cycle begins again until an acceptable offer is received.

Sincerely,

Mike Warren
Keller Williams Realty
0 votes Thank Flag Link Tue Oct 5, 2010
Bill is correct. There is no magic offer price that will be accepted by a seller. But, you can ask your realtor to check the sold properties in the area to see what other similar homes have sold for. If you are looking for a home at $80,000, I believe that homes listed for $120K - $130K will be out of your reach. Keep in mind that you probably will be requesting closing cost assistance and this will net the seller even less than the $50K reduction you would be asking for.

Best of luck!
Web Reference: http://www.DesariJabbar.com
0 votes Thank Flag Link Tue Oct 5, 2010
Tjo,

We're sorry to say there is no simple formula of percentage that will guarantee the results you are seeking. Our recommendation is to consider working with a local real estate professional that both knows the local market and understands foreclosure transactions.

If you are looking to spend in the $80,000 range but are looking in the $120,000 to $130,000 range, you may want to consider closing the gap a bit. By looking at a $40,000 to $50,000 price differential, you may be expecting the lender to make too much of a drop to be reasonable.

Good luck,

Bill
0 votes Thank Flag Link Tue Oct 5, 2010
Dear home buyer,
Congratulations
I hope these several lines will answer your question.
It's unwise to pay too much,but it's worse to pay too little.When you pay to much,you lose a little money, that is all.
When you pay too little you sometimes lose everything,because the thing you bought was incapable of doing the thing it was bought to do.
The common law of business balances prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder it is well to add something for the risk you run. And if you do that,you will have enough to pay for something better.
There is hardly anything in the world that someone can't make a little worse and sell a little cheaper-and you shouldn't consider the price alone.
Good luck and if you need further help please, feel free to contact me.I'm right here in Grand Rapids.
0 votes Thank Flag Link Tue Oct 5, 2010
Thats a tough question, and your best answer is going to come from a combination of considerable Real Estate experience, knowing how certain banks have reacted in the past, and examining each case.

That said, you're looking for a general rule of thumb, so here goes:
Ive seen at least two main recent strategies with REOs.

(1) A bank will list a property in a high traffic or desirable area considerably below market value, in order to garner major attention and get multiple offers all at the same time. The strategy can drive up the price quickly and sell the home immediately. In those cases the winner will probably need to offer above list price with the least number of contingencies attached.

(2) The bank gets an appraisal, lists at a competitive price based on the market value, and drops the price incrementally (monthly usually) until it sells. In these cases, it is rare for a bank to accept an offer much below 90% of the current list price. So, if you have no competition, its probably good to figure out that 90% number, add on your closing costs, and consider if the resulting number is worth offering. If its too high, ask your Realtor for the list date or date of the most recent price drop, and check back in 3-4 weeks.

Pete Bruinsma, GRI
Associate Broker, Grand Rapids Realty
http://www.UsePete.com
616.293.5731 (mobile)
reo@grar.com
0 votes Thank Flag Link Tue Oct 5, 2010
HI TJ,
Anna is correct with telling you to discuss this with your buyers agent.......as she can show you what has sold. Whether it be a bank owned or regular sale. There are so many factors in putting in an offer, as you may enter in a multi offer situation or you may be the only bid. My client the other day offer over asking price and we still lost. Also, know banks will conduct either their own market evaluation, must times by doing a BPO ( brokers price opinion) so they will have some idea what the house is worth. If new to the market, it may not go for much less then asking price. I always tell my clients to put their best offer in, as if they loose the bid it is okay, because they would not spend any more for it anyway, and if they win the bid, they feel the home is worth it and/or good deal. I have seen many buyers worry that they are bidding too high only to loose to another bidder, then kick themselves they did not put more in. Good luck in your home purchase!
0 votes Thank Flag Link Tue Oct 5, 2010
Good Afternoon,

Statistics show that foreclosures sell for approx. 27% less than regular market value properties. Short sales are also in that same ball park. If you are looking at a $120K house you should put an offer around $87,600 but it really depends on more than that. It also depends how long the property has been on the market, what financing condition it is in, where it's located, etc. If you have a specific house or what a list of foreclosures, please call Dave @ 616-893-3287 and he can help you further.

Have a great day!
Web Reference: http://www.vdovickgroup.com
0 votes Thank Flag Link Tue Oct 5, 2010
Offer what you feel it is worth based on recent comparable sales. That way, if you get it, you know you paid what you felt it was worth. If you don't get it, at least you walk away knowing you gave it your best shot.
Web Reference: http://www.golftobeach.com
0 votes Thank Flag Link Tue Oct 5, 2010
Banks accept offers based heavily off of BPOs (Broker Price Opinions). Have your agent do a BPO on the property (this is not a CMA) to see at what pricepoint the bank is most likely to accept the offer. If your agent dooesn't know what a BPO is this may be the first foreclosure they are working with a buyer on. Also, terms are just as important as the price, so minimize contingencies and have a sooner closing date (by end of the month if possible).

Good luck to you
0 votes Thank Flag Link Tue Oct 5, 2010
What is your agent advising.....when making offers you need to be aware of comps--recently sold similar properties in the immdediate area--after reviewing the data a determination on price can be made--there are no set standards as to how much below list price one should offer--do keep in mind that if a property is listed on target for today's market or slightly below, multiple offers may occur.
0 votes Thank Flag Link Tue Oct 5, 2010
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