I've looked at some bank-owned too. I don't know if you're aware of New Castle County's Parcel website, but you can look up the last sale info on a house you're interested in. Here's how I would do it

Look up the last sale,
If it was in 2007 take 25% off that price. If it was 2006, take 30% off.
Take another 10% off since in this market, you have a lot of leverage as a buyer.

Keep in mind: short sales typically produce a 19% loss for lenders vs a 40% loss at foreclosure auction according to a CNN article. It makes sense for you to offer somewhere in between those numbers.

Thanks for your suggestion....

I walked away from the home as I felt my agent wasn't looking out for my interest. I was told this is a good deal based on the recent sales in the neighborhood.

Good advice and I do have the cash and pre-approved letter.

I know w/ the 5/1 ARM re-adjusting this year, the housing market has a significant down risk that will continue to push the prices to lower levels.

If I don't get the good deal, I will walk away w/o any emotions....

Thanks!

Andrew:

It sounds to me like you are starting a bit on the high side with your "offer" for the property.

Rule of thumb when dealing with banks and lenders for REO's is to start at least 30% below the asking price and many peole start 50% to 70% below the ask.

Christopher is right in suggesting the use of a professional *BUT* be sure to use a *BUYERS AGENT* who is working for you, not the seller and can counsel you on your strategy.

This is a complete buyers market and if you have cash or are pre-qualified ready to close, YOU ARE KING!!!

Don't become emotionally involved with the purchase because there are over 1-million new homes sitting vacant and 3-million foreclosures sitting vacant that are NOT on the market.

This spring will release of flood of inventory that has never been seen in the USA and prices are going down futher and faster than ever before.

Don't let the agent BS you with "values" based on sales made 6 months to a year ago. Even the deal that went to record or closed yesterday could be 6-months old and is really not a comparable sale in today's market.

Just my two cents worth... but if you are a buyer right now you are king and be ready to walk away.

They will chase you down trying to get you back in the deal six-months from now!

Andrew
The best way to handle an offer on a property (bank owned or otherwise) is to enlist the assistance of a negotiator. It gives you untold benefits without any real costs to you. The marketing costs to pay an agent have already been negotiated with the seller at the time the property was listed for sale. Find Realtor that you are comfortable with to educate you on the property, neighborhood, city, schools, etc. He or she can present you with options that you may not have been aware of. More importantly, they present a barrier between the seller and you allowing a low offer not to be so offensive as to stop negotiations completely. As a buyer, you never want the seller to determine that negotiations are finished. If the home is a priority for you, your biggest strength is knowledge and that is what a Realtor will bring to you.