You have to make a decision on if you want the house or not. If you want the house, what is it worth to you. I you want to try to steal the property, make a offer but don't be suprised in you do not get a response. It is all about supply and demand and the bank evaluating what kind of offer they currently have and the likely hood of recieving the same offer or a higher offer in the future. The question becomes time vs money and what are the trade offs.
The reason there is no standard is because the demand and supply of homes varies by state by city by price range.
First Weber Group
Certified Distessed Property Expert
First National Realty
Do not think logically and DO NOT try to negoiate like you would with an individual. Going back and forth is NOT the norm and it does not "wear" the seller down. Your offer might be one in 3,000 thousand from around the country they have recieved in any one given day (now, not necesarily on the same property).
If a REO property has been on the market for 90 days or better, without any offers - then that is about the time they start dealing a little more. Or if you are buying more than one property from them. On newly listed properties, the several banks we represent, usually will take off about $5k (regardless of the sale's price) - then later on, more, but not very much in the begining.
Keller Williams Realty
Another item to consider is how long has the property has been on the market, has there been any price reductions? If a home recently had a price reduction, the seller may not be too keen on a low-ball offer. Typically if a foreclosure has been on the market awhile, they will automatically drop the price by a certain amount (will vary) at the end of each month.
Additionally, if the house has been on the market awhile, ask yourself why? Bad location? Mold? Heavy traffic? You need to also see what similar houses in the area have sold for and when. The house two doors down may have sold in a few weeks, but that was three years ago.
You must make sure you have not only the funds to make the necessary repairs, but you will need to have at least 6 months worth of funds for holding costs in the event the home doesn't sell right away. Just my humble opinion.
You've received some pretty good advice so far from the previous answers. Another thing you can do to help establish a starting point if you're serious about this house is have your agent ask the listing agent selling the house if there have been any offers on the house since it's been listed. If the answer is "yes", find out why those offers were rejected or why they fell through. You'll often get clued into whether or not your prospective offer would be considered based on those conversations.
Furthermore, if one of the offers that was rejected sounds close to what you might offer then have your agent ask if they think a similar offer might get accepted this time around. The answer might be "yes" if that previously rejected offer is older than 30 days. Why? Because lots of factors go into when or why a bank unloads a house from their inventory. Whether you're buying a foreclosure or a FSBO, a little bit of sensible investigation and questioning will go a long way.
Best wishes on your home purchase!
It is difficult to predict what a bank will accept for a property but there are some other factors to consider.
If the home is in a popular location and has appeal this should impact your offer amount. Additionally, the length of time the property has been on the market may also be an import consideration. The longer the bank has had to hold the property the more it's costing them.
A local real estate professional will be able to help you with the realistic numbers you seek. Keep in mind that many opportunities have been lost because of buyers coming in too low with their offers. There are locations and situations where the buyers come in thousands of dollars above the banks initial asking price.
Ask the agent who did the CMA whether it reflects the condition and needed repairs of the property. If it doesn't, then adjust the CMA down to account for those repairs. Just a side note, though: Even homes in good condition often need more than $1,500-$2,000 work. That might cover the cost of carpeting. Or paint. But foreclosures often have a number of things--including more serious things (roof, water damage, HVAC, intentional interior damage)--wrong with them. I'd suggest you get a contractor in there to give you a ballpark figure.
However, assuming the CMA is correct, and you've adjusted it if necessary to account for repairs, that's what it's worth. Further, whether it's priced right according to the CMA, that's about what the bank thinks it's worth. So the report you read saying to start with 50 cents on the dollar is bad advice, even if the house is way overpriced. (If it's that overpriced, you'd probably be better off not making an offer.) If it doesn't sell, the bank WILL drop the price in stages until it does.
So, you know what the house is worth. Now you make an offer that's no higher than the lower of: (1) the adjusted CMA, or (2) the asking price. In your case, you're saying it's about the same. You can, of course, offer anything you want. But to have a reasonable shot at actually having your offer accepted, come in close to the lower of the adjusted CMA or the asking price.
Now, even that doesn't always work. In the example that Jeff gave (asking price $18,000, worth $25,000) if there's competition you might have to go up to the full value of the property; you might get outbid if you offer only the asking price. But in your example, the two are close together.
Like I said, have a contractor give you an estimate for the repair costs. I suspect it's higher than $1,500-$2,000. But then you'll have something to go on.
Hope that helps.
I hate to be the first to tell you but there is no standard. If the CMA says the house is priced right then maybe it is minus the repairs/changes you would want to make. Keep in mind that because it is a foreclosure does not necessarly mean that it is a bargin. It is a foreclosure because the original owner could no longer afford it, nothing more. With that said, if this house is in good condition and from what you have said it sounds like it may be, then you are fortunate and the house may be worth the price. What makes many foreclosures low priced is that they are not cared for and many time simply abused. In addition I would examine the CMA closely and make sure the it is accurate.
The last piece of advice I will give is that if you do not have an agent representing you...get one.
The real bottom line is that the value of a house, foreclosure or not, is what a williing buyer will pay for it.
Weichert Realtors - BenchMark
Check out these two blog posts of mine: http://chattanoogalistings.wordpress.com/2009/09/24/making-a
Both of these talk about how to determine what you should offer. The bottom line is, you really need a good buyer's agent in your corner to help you figure this out.