I agree that other prices in the area are important as well, but real estate is a market and markets change. Wall Street people would argue that the cards have no memory. The best thing to be sure of is that the property is worth the price TO YOU.
If you take your agetns adivce and offer $167K you will save only $900 (less than 1%) but you will have a much stronger chance of getting the house you like.
Despite all the Bank repo hoopla, REo's do not routinely go for much less than they are worth (once you consider the dead lawn, the stained carpet, the torn linoleum. ) So a $900 discount is not neccessarily bad on top of $10,000 price reduction. By all means look at the CMA and ask to have it explained to you why the house is worth the offered price.
Your own agent is probably closest to the situation and knows best. Typically with my REO situations I call to find out if there are multiple bids. I then ask them if they have experience with this company. If they do, how long does it take to get an answer from the company? If it is a situation where there are no bids and they answer typically within 24 hours I will try a much lower offer.
If there are multiple bids, or a situation where multiple bids might occur I would bid slightly under what the asking price is. Typically they aren't going to want to hear that you need closing costs paid. They usually like strong buyers and I have found that they will accept a lower offer with higher earnest money at times.
Again, your own agent probably knows best, but consider paying your own closing cost if possible.
RE/MAX Bryan-College Station
I am a longtime investor and own 8 REO properties.
A good agent will help you convince the bank the property is over-priced. Don't fall for the "they have multiple bids" garbage. If others want to pay more that doesn't mean it is a good deal for you. Most buyers even today need to finance so if the house doesn't appraise at the sales price they won't be able to close and it will go back on the market after a couple weeks.
A good buyer's agent knows how to convince the bank their ask is too high and needs to come down. Be careful of crooked brokers who take these listings for maybe $200 and put their agent's name on the sign. That broker gets a percent of his or her agent's commission as a buyer's agent so anyone working with that brokerage as their buyer's agent will know your bid price. Often i get te bank to come down and a buyer's agent comes ina fewdollars over mine and takes it.
Remember, if you can't say no it is not a negotiation. Fire any real estate agent who works like a car salesman - get you emotionally hooked on the property so you will pay anythimg you can.
Sounds as though your buyers agent completed required work determine how submit a winning bid on your behalf. Low Ball an offer may not be your best interest.
Bank does not receive $167,900 at closing
Most don't understand bank as the following costs:
a) Realtor fees
b) Legal fees foreclosure on property
c) Paid taxes for at least 12 months or more
e) Assest management company clean up
f) Lawn maintenance
Name a few costs most buyers not aware
In some instances we recommend buyer OVER list price, other circumstance home is not worth asking price.
If you like home submit your offer, however keep in mind your agent appears representing you favorable position.
National Featured Realtor and Consultant, Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911
I would say it all depends on how bad you want that speciffic house. Whe I buy an investment property, I usually bid on 5 different ones to get 1. The house I live in is worth $300K, I had to put $70K in rehab, but I bought it for only $110, which was about $50K less than what it was in the market for...
Make sure you have a clean title
Make sure you have a good appraisal.
98% of the headaches come when the agents/lenders not taking these two steps seriously. I'm a licensed mortgage broker for all of Texas http://(www.mylendingplace.com) and if I were you I wouldn't even put a $1 down for earnest money until I had these two items nailed down. And donâ€™t let anyone tell you they canâ€™t order title without a contract.
Because in a non-REO situation, you put your earnest money down, write contract, THEN ORDER TITLE, APPZL, But with REOs you should order Title, APPZL, then write contract with earnest money after you know the property has a clean title and acceptable appraisal.
Call me if you have questions 512-577-2958
My buyers just completed negotiating an offer on a REO home. It was listed for 91,900 had been at 132,000 for 220 days and reduced slowly to 91,900.We offered 85,000 with the bank paying all closing cost. We also put in a walk clause for inspections with a limit of 2500.00. In doing that my buyer if they want to and the inspection comes out to more than 2500.00 in repairs You can always put an offer in as long as if you decide not to purchase the property you are protected to get out of the contract. There are some great buys on the market.
take the arv (after repaired value) x .70
then subtract your fix up cost. and that should be your price this way you have 30% of the value to negotiate with....ex on $100,000
x .70 Built in Equity
- $10,000.00 Minus repairs needed to sell at top price
start at $60k now you can use your built in equity to negotiate with if you need to go up but make sure you know already what your absolutely willing to pay if it's only $80k then make sure you determine that before hand and make sure you stop there if you don't get the house at the price you want move on there are plenty of houses in the market right now they actually want you to buy this property to get it off there books also dont listen to your realtor if you offer close to the asking price that means a bigger commision for him/her. Hope this helps
In my experience, banks are not keen on paying closing costs. It just seems to go against their principals, but maybe the Dallas market has different customs. In CA, the customs on who pays for the closing costs vary from county to county. Your agent knows best. Good luck.
My experience representing buyers with Bank-owned property is that banks will definitely negotiate. Banks are in the business of lending money, not owning homes. There are non-monetary concessions you can make as well to make your offer more attractive despite a lower offer; opt for a shorter escrow period (if the norm in your area 30 days, offer 21 days if your lender and agent can meet those timelines), early contingency removal (in CA this normally happens in 17 days - try 12 days), etc.
One word of caution - the banks make no representations with regard to the condition of the property. Even though you are planning to have a professional home inspection, you may wish to have other major items looked at by specialists to make sure you know what you are getting into. Home inspectors are generalists. You will have no recourse later if the A/C unit blows, but does not blow cold air. You will have no recourse if the bathtub drains slowly not because of a clogged pipe, but perhaps because the sewer line has collapsed. Blah Blah Blah.