It does not matter how much is owed to the bank when you are submitting an offer. Not sure if you are referring to a Short Sale or a Bank Owned Property? Either way, the bank is going to want an offer that is close to fair market value. The lender usually has an appraiser go out and appraise the home to get an idea of the current market value. If you are working with a real estate agent, they should be able to give you some comparable listings so that you have a better idea of what could be a reasonable offer. Good luck.
Sara Mehrpouyan CDPE
Short Sale and Foreclosure Specialist
Dre license #01712757
You may feel frustrated by the answers below, but they are good answers. The bank is not pick up the balance they are owed. They will be looking for Fair Market Value even if the balance is half of that amount or twice that amount. A Broker Price Opinion (BPO) or appraisal will be done to determine the tru value and the will put it on the market for that amount. They may or may not have flexibility in accepting an offer on the home depending upon condition, community, and several other factors. Today, we are not finding 'screaming deals' with these REO properties.
It is hard to determine what the bank is owed because of liens, attorney fees, interest, etc. If you could find that out you will still find that the offer the bank will accept is not determined by that at all. Bottom line is, don't look strictly for bank owned properties. There are sometimes better deals out on the open market. Also, each market is different, so you will need to consult with a local real estate professional to guide you into finding the best home for your situation.
Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
Speak to a local Realtor and have them assist ... there will be no cost for their valued services.
Your offer should be no more than what the house is worth. Perhaps offer less.
Consider: Maybe the house is worth only half of what the bank is owed. Example: the bank is on the hook for $400,000. But now the property's only worth $200,000. You decide to offer 90% of what the bank was owed: $360,000. You're vastly overpaying, and it's likely the property wouldn't appraise for that.
Even if the property is worth $300,000 and you decide to offer 80% of what was owed, you're offering $320,000 . . . still significantly overpaying.
Besides--being blunt here--don't worry about being "fair" to the banks. They can take good care of themselves. Yes, it'd be nice to make an offer that the bank accepts. But your first priority absolutely must be to make sure that you're getting a reasonable value.
Work with a Realtor. Determine what the house is truly worth. Then work downward from that point.
Hope that helps.
Tom Sommers/Edina Realty
The bank can only sell a home for what it's worth. So even if more is owed on it, through the foreclosure process, that becomes irrelevant (as far as buyers are concerned). The property will be listed on the MLS, and the bank will use sales comps to determine the listing price. Then buyers will have the opportunity to place an offer on the property. In the case of a foreclosure, most often it is wise to not bid too far under asking though, as banks will be unlikely to access a lowball offer, and there may be a lot of competition on the property if it is priced well. Having an experienced agent as your buyers agent can be crucial, as they will help you determine how to best make a successful offer. You can read more about the foreclosure process here: http://richardschulman.com/buyers/foreclosures/ Feel free to contact me for any further assistance or questions.
Keller Williams Realty
#1 Buyers Agent KW Los Angeles Region
There is no easy answer to this question. I will give you two examples to illustrate. A good real estate professional can find out what the previous mortgage was on the bank. But the biggest factor is the market price. In order to determine that, the bank will have a real estate office do a BPO (Broker Price Order). After they have the BPO the bank gives the house as a listing to a different brokerage to sell.
Imagine a foreclosure that only one bank was owed 500k and the market price is 400k. If the asset manager wants it to move quickly, they will price it below market, perhaps in this case, at 375k. If they are not worried about moving the house, they may ask the listing agent to price it at 425k.
Now imagine a house that had two mortgages. The first was for 400k and the second for 100k. When the first forecloses on the property, the second completely loses out. So, the bank that foreclosed may be happy to list it at 400k.
It gets even more complicated with tax liens and third and fourth mortgages. But the bottom line is that the bank that foreclosed is the one that will determine what is the right price. So, pick a real estate professional that knows what they are doing and knows the market.
Please let me know if I can help.
However if you're curious about the outstanding loan I should be able to access that for you.
Prudential California Realty a HomeServices Of America and
Berkshire Hathaway Affiliate
Office: (888) 995-7575
DRE # 01438893