Foreclosure in Greenfield>Question Details

Steve, Home Buyer in Greenfield, WI

Is offering 80% of the listed price on a REO property a realistic starting point? I would like to pay no

Asked by Steve, Greenfield, WI Thu Jul 24, 2008

more than 90% of the listed price. This property has been on the market for three months.

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I have assisted 6 REO home buyers in the last 90 days and have noticed the banks all seem to be coming back with about the same discount percentages this year. Most start with a counter of 2% and will go down toa 7% total discount. Remember that REO homes are supposed to be already discounted compaired to other sales. A good rule of thumb here in florida is to shoot for the tax accessors value for the price on an REO. Seems to be running about 18% below market value.

Just remember... You have the power right now, and you have the ability to move up in price from where you start so just ask away. Just be willing to say yes at some point.
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2 votes Thank Flag Link Thu Jul 24, 2008
1. I would say comps are a fine way to determine value but have nothing to do with how much THIS particular seller is asking for the home. Comps in the case of a REO apply in the same way.. you dont know how much money the bank is expecting.
2. If you are working with an agent you shouldnt be looking at houses you cant afford.
3. I agree with wholy and this should be the main determing factor. what are you willing to pay for the house? Before submitting an offer the agent should go over with you and ask if this is the highest amount you would be willing to spend and risk losing the house. If its not then either take the chance that someone puts in a stronger offer or you make a stronger offer yourself. You cant count on anything.
0 votes Thank Flag Link Wed Jul 30, 2008
It's as good as many other starting points, and better than some. Just don't assume it's going to win the deal, or even get a counter-offer. I'm going to steal an answer from another Realtor - Don Tapper - who posts on Trulia frequently. His theory on making FAIR offers is as follows:
Select the lowest number from the following three: (1) comps, from a CMA, (2) what you're preapproved for, and (3) what you're comfortable spending. Then look at the listing price. If it's higher, stick with the lowest of those three numbers. If it's lower, drop your maximum down to the list price. That process gives you the maximum you can spend on the property. Offer aomewhat less. How much less depends on how aggressive you want to be, and how much you want the property.

Get comps to make sure you're not OVERpaying.
0 votes Thank Flag Link Wed Jul 30, 2008
I would say the market here in Wisconsin is completely different than elsewhere in the country. Maybe some regions are the same but it is difficult to compare what goes on here to anywhere else.

Simple rule of thumb about pricing.. What is it worth to you?

Sounds too simple to be true but ask yourself before you write the offer what is the absolute most you would pay and if that is the highest you go and you are ok with the risk of losing the property to a higher offer then you won't be sorry for your decision.

As far as pricing.. the house is already discounted. There will be competition regardless of how long it is on the market. Never count on days on market to figure out the price because it has nothing to do with how the price is determined.
0 votes Thank Flag Link Fri Jul 25, 2008
All depends on the property you are talking about. I have seen some REO properties that are priced very low and are getting multiple offers. When you are competing with others and all are at listing or slightly higher, you just won't get a property by offerin lower than listing.

There is never a blanket strategy in making offers on any property. You have to know the property, the market and deal with them one by one.

0 votes Thank Flag Link Fri Jul 25, 2008
Sylvia Barry,…, Real Estate Pro in Marin, CA
Dear Steve,
Go for it. I respectfully disagree with Lee's answer about tax assessment particularly in Wisconsin where assessment can be 100% of the home's market value depending on your municipality. Have a figure in mind of what you're willing to pay for this property based on repairs, neighborhood value, and your budget. Hopefully you are working with a good realtor who can help you determine these factors and good luck with your purchase!
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0 votes Thank Flag Link Fri Jul 25, 2008
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