Banks will, sometimes however bid in less than what they're owed. Often there is a lesser price at which they'd rather have the cash than the property.

The auction opening bid is a combination of the principal balance, late fees, penalties and other fees that are allowed by law. The bank may not arbitrarily boost the price beyond the combination of these fees. They are detailed in the Notice of Trustee Sale document. It is possible to acquire a property after the auction and before it is listed but as stated below. Since the bank now owns the property you can offer what ever you like, but the bank will have other plans. The big banks are very tough to deal with. They have set work flow rules that narrow the options that realtors have to assist you. The smaller banks are more open. The banks want fair market value now that they officially own the property. Time on market, condition of the property and comparables will set your initial acquisition strategy. Each situation with banks is different. The tenants may have legal rights and be able to stay by law - i.e. with out your permission as the new owner. Good luck-

Here is an artical that just came out in the seattle times today.

http://seattletimes.nwsource.com/html/realestate/2009894938_…

The auction price may be totally irrelevant to the list price when listed. The last REO house I was in it appears they simply bid in the full amount owed. When first listed it was for $189,000, almost 50% less than what was owed. After a month they dropped the price to $165,000.

The tenant question may make a difference to the bank. Under new state and federal law the tenant has a right to stay for a period of time. Under one of those laws the tenant doesn't have to pay rent, while under the other (federal?) they should be. Either way, if you were willing to take the property prior to the right to possession terminating, that might interest the bank. Then again, it might not. You're dealing with bureaucrats, whose pay is not necessarily affected by their decisions.

Your questions and my answers below:

- Do banks typically sell the property for more than the foreclsoure auction price? There were no bidders in auction, plus the porperty was listed sometime ago with no offers -- would the bank take these into consideration when pricing the home? At auction bank set a minimum bid for the property. If there are no other bidders it goes back to the bank at the opening bid.
- I believe that the home currently has a tenant (they've been there for at least a few months, even before the auction). We don't mind having the tenants continue renting, if we buy the home. Would this make a difference to the bank (since the bank wouldn't have to go though the eviction process)? Not really.

Thanks for all the useful responses. It's much appreciated. I have a few more questions...
- Do banks typically sell the property for more than the foreclsoure auction price? There were no bidders in auction, plus the porperty was listed sometime ago with no offers -- would the bank take these into consideration when pricing the home?
- I believe that the home currently has a tenant (they've been there for at least a few months, even before the auction). We don't mind having the tenants continue renting, if we buy the home. Would this make a difference to the bank (since the bank wouldn't have to go though the eviction process)?
- As far as I could tell, the home is still not on REOTrans -- though I do have the info of the listing agency.
- BTW, the home is owned by one of the big banks :(

If you have a specific property you are interested it is not that hard to buy a bank owned property, the problem is the price.
We have bought several properties directly from the bank after the bank had foreclosed on the property. In most cases we had short sales already working on the property. In most cases you could have bought them at the same price they went to action at.
A bank will generally list the property based on the BPOs and drop the price overtime.

Smariner,
Banks like any other party want to get the most money they can get on their properties. So while it is true that banks don't want to own property, once the foreclosure has occured and they've spent thousands of dollars in accompanying legal fees, etc., they want top dollar. Generally they get 3 Broker Price Opinions (BPO) to establish the property's current market value. You would think that would mean a quick sale but often that's not the case. Beyond location, physical condition and people's reluctance to take chances in the current real estate market makes it an uphill battle for banks like any other seller. It is clear from what took place during the first half of the year, that bank owned (REO) is where bargains can be found followed by short-sales and then ordinary sales. It also seems that most homes listed this year have had some sort of financial stress related to the sale. Unplanned relocations, divorce and job loss being some of the catalysts. So while you might be able to negotiate a terrific sales price in a private sale with a seller who is not under water on the mortgage, it's obvious waiting until the foreclosed home comes to market will more than likely provide you a better opportunity for a bargain. Unfortunately, the element you can't avoid is the possibility of other buyers who will recognize the value and likely provide you competition. The best thing to do (as always) is target your locations, keep a watch on new listings and be ready to move fast.
Steve

I'm going to assume that it's a specific property that you're interested in...

The answer is a qualified "yes" but there are a few factors to the equation.

First is bank. If it's with a large bank, you're very likely out of luck. They will follow their process: buy at auction and then list with approved REO agent. A smaller bank is more hands-on with this process and you may have a fighting chance.

Second is price. If you know what it was purchased for at auctionand you know what imay have been listed for prior t the auction, then you have an idea of what the bank thinks it's worth.. If that's in your price range, then make the call and see what you can do. If not, you're better off waiting until it's listed and making your offer after, say, 30 days. the bank will want to know that it's not worth what they thought it was.

There are a LOT of people promising a direct link to the banks and bulk REO Purchases. I've found that most of them are middle men to other middle men.

I hope that helps.

Smariner,

Myself and my team list properties for several banks all over king county. And I wanted to answer your question because Some of what Kary post below is true but there are ways you can buy bank owned properties first before they are listed. We have sold several before they come on the market but let me explain how this goes about.

The banks assign properties a property to us thru a system called REO Trans. Sometimes we get the properties assigned to us months before they will even hit the market. And they sit on our system for months for several reasons. Because a lot of times we have to evict the owners/tenants, trash out the properties, do some repairs if that bank does repairs, clean it up, and much more. So it can sit in our system for months before it comes on the market.

But you can go to reotrans.com and sign up as a buyer and see all the listings because banks will post them on that system as soon as they assign them to an agent. Because they are able to sell them before it hits the MLS. Now what they do is if there is a house that you like they will direct you back to the agent who has or who is going to be listing the property and you will need to contact them.

So let me give you an example. We had a listing that an agent called us on because they had an investor. This property was not listed yet. We explained to them that we would keep there info until we got closer because we were at the very beginning stages. And when we got to the point of the bank had done there brokers price opinions and the appraisal. The bank told us they could write an offer but they have to be serious he is not going to waist his time. There were things that needed done to this house and things that the buyer would have to repair. Well we had bids for all that work already so the bank new what it would take to get it fixed. The buyers came in with a very good offer and the bank said they would accept it. Once the bank said that they sent us the listing paperwork to list the property on the mls.

Well we listed it an during us getting the paperwork back and forth we got 5 other offers in one day. The first person was in a signed contract by the time the others came in. So it can be done. But like Kary said you have to be willing to pay what is fair for the property.

Most bank owned properties are sold just below market value what ever that is. Banks put properties on the market at fair market value. Then they will send price reductions about once a month if the property is not selling. But in the past year our bank owned properties are selling within days to weeks that is mostly anything under 500,000 any thing over 500,000 is sitting longer.

You can look up our listings under reotrans.com All the listings are under Tim Andrews. I hope this helps.

I'm not sure why you'd want to. If your offer is for less than what the bank was planning on asking, they'll say no if they haven't exposed the property to the market. If your offer is for more, you'll have wasted money. Also, banks are often a bit unrealistic at first as to what the property is worth, so to get them to accept an offer would probably result in paying more than what you would have to otherwise.

The only time I could see doing this is if you had a particular house in mind. One you knew something about and wanted for some particular reason other than it being REO. There's also I guess the real junker places that are practically cash only, where you might avoid a bidding war, but I wouldn't recommend those for other reasons.