Hi Mark-

I wrote this article on my blog, recently, with regard to making offers on foreclosures. It should help answer #1:

http://www.realphoenixliving.com/2008/11/12/what-percentage-…

For #2, I don't know any lenders that are doing 100% financing. Banks will go noticeably lower when a buyer offers all cash. That, and they'll take an all-cash offer over a financed offer 9 times out of 10. Cash is even more king than ever before.

For #3, if you decide to put financing in place, comparables will be used. If you've made some improvements to the property (fixed up the problems often associated with a foreclosure), that will help get a higher appraisal than just what you paid say 30 days ago. Evidence of the value of those repairs can be used by an appraiser.

I hope that helps!

Mark,

You can be agressive on price, however I am witnessing multiple offers on homes that are in good quality in great subdivisions. It seems like somewhere between 10-20% is what the banks are considering, there are many factors time on market location, condition of home etc.

Cash usually rules however from several recent offers I am not sure it is the case. If there are no offers you should be in good standing. I had a title rep say that as long as your loan is in place you can change to financing as long as you don't close late. Otherwise some lenders are chargeing $100-150 a day for a late close.

The purchase price is what determines the comps in the area.

I hope this helps, feel free to contact me anytime!

Mark,

I have extensive experience in the area of foreclosures and below is my opinion regarding your questions:

1. If the bank has two very similar offers and one of them is cash they will most probably go with the cash offer. So yes, it does help. However there are many other factors that will determine how you should approach an offer. They include time on the market, area comparables, property condition, etc... If try to go too low you might create a bad environment from the start and at the end you might not get their best pricing. Presenting a good offer backed up with data is the most important factor.

2. You usually present only one offer. Showing two might show that you are not sure of what you want to do and that will not help. If you are qualified for a loan you can present your offer that way, then later change it to cash using an addendum. Changing it the other way around might be tricky and the bank might cancel the deal. I doubt that the bank will give you 100% financing and that will not help you on your negotiations.

3. The appraisser will use several comps in the area. But if your property was recently sold, they might also take that into consideration.

Hope this helps.
Good luck!

Hello Mark,

Welcome to the phoenix foreclosure market.

1. Having cash, and showing that you could close in 5 to 10 days buys you the banks attention.
What %, depends on several factors. How long has the property been on the market? How many offers have there been? Is the property priced as an awesome deal? How desperate is the bank?

2. In my opinion ...NO. 100% is what got us into this mess.

3. Only the bank giving you the loan can really answer that. With that said, They are going to look at the comps.

Some things to consider.
The valley is loaded with vacant apartments, condos, and single family housing.
The location, and condition of your purchase is everything. Think Light rail.

You may want to consider checking into Http://www.HudsonandMarshall.com They are having a Bank owned home auction (several hundred ) January 20th, 21st, 22nd, and the 24th, 25th in Phoenix.
I have been to several of their auctions, unlike many other auction, they run an honest show.

This maybe the place you find the deal, that Investors dreams are made of.

Good luck
Patrick

1. Yes and No. There is no reason for a lender to sell you a home too much if at all below market. You do need a pre-approval letter in all cases but a cash offer has an advantage especially in this more difficult financing climate. You can start low but we have been been putting in offers which had to compete with, sometimes, a dozen others. So there is a lot of demand for good deals.

2. You are going to have a very difficult time fining financing for 100% for an investment property. Is it cash or is it financing? that is what the owner will say.

3. Appraisers always use comparable. It's hard to establish a value if there is not comparison. Even if a lender does a drive by it still compares it to others.

Treat an REO sale pretty much as any other sale. Even though its a bank that selling there are people behind it and they make the decision. The only difference is that lenders have no sentimental attachment to a property: it's all about the price and your ability to close and do as you promise.

Be aware also that the rental market is a bit weak now so take into consideration a higher vacancy rate when doing your numbers.

Mark,

Here are some answers to your questions:
1) Pricing will depend on how long the home has been on the market. Newer listings don't generally go for much lower than full asking price. The bank will think it's too quick to get an offer so they will hold out for full price. If it's been on the market longer...I'm seeing the banks take offers closer to 10% of the list price.
2) For what I've seen the banks don't care how you are financing the home. Cash won't get you a lower price. Money is money to them.
3) If you do pay cash and then refinance, lenders will be looking at the neighborhood comps.

Good luck and happy house hunting!

Here are some answers that I hope you find useful, I specialize in Bank Owned Properties and have dealt with many different banks all over the Valley:

1.) Typically, yes-there are many factors that go into what the bank lists the property for, an experienced REO agent can guide you in the right direction. All bank operate differently, some things you may want to examine for starters are: days on market (typically the longer a home has been listed, the more flexible the bank is on price), what other REOs are selling for, how many offers have been presented previously, etc.

2.) I have not heard of a bank accepting an offer in that manner, they usually want to get the property off their books so financing the property wouldn't accomplish that.

3.) Most likely the comps in the area will be the biggest factor.

It sounds like you want to pay cash but with interest rates being at a historical low, it would be an excellent time to put 20% down on several REOs, giving you some leverage.


Check out my blog for some additional useful tips:


http://www.trulia.com/blog/dan_mullarkey_abr/2008/12/buying_…