Home Buying in 60025>Question Details

Mike_fl, Home Buyer in Skokie, IL

Buying bank owned property - how much to offer?

Asked by Mike_fl, Skokie, IL Mon Aug 24, 2009

I'm considering putting an offer for a bank owned property. The listing price is approx. $600k and the mortgage took by the previous owner was more than $1M . The real estate broker I work with, claims that usually there is very little, if any, flexibility on a bank side (meaning a couple of thousands, at most), though he also admits that he does not have much experience in dealing with banks. My intention is to offer 10-15% below the listing price.

I realize that each situation is unique, though I was wondering if someone provide some insight on how it usually work. Also, do banks negotiate or they just tend to reject the offer if it is too low?

Thanks,
Mike

Help the community by answering this question:

Answers

10
Mike,

I just had an offer rejected that was all cash and 10% over the asking price. The deal it turned out went to a buyer who had waived the right to an inspection. What this tells you is that the banks are looking for quick closings with the least amount of contingencies and possibilities for the buyer to back out. .

My recommendation to you is to work with a competent buyers agent who can help you analyze the market, help you write a good offer, and has closed a good amount of REO deals. You should also be looking at the history of the REOs that have closed in the past 6 months and compare the listing prices with the selling prices. Hopefully as you gain more insight into the market and learn how to structure your offer you'll get the deal you're looking for.
1 vote Thank Flag Link Tue Aug 17, 2010
One more thing Mike. No one cares how much the seller paid for his property or how much he borrowed against it. It's all about the current value within approximately $10 to 15K
0 votes Thank Flag Link Sat Nov 24, 2012
I have seen bank owned properties priced below market value , with of course the intention (I think) to attract more offers in a short period of time. I think your best bet is to know your area. Know the values, the schools and know what the most recent comparable properties sold for. This way if a property is under priced you will know this and offer full price or above that.
0 votes Thank Flag Link Sat Nov 24, 2012
Bank owned to me means REO not short sale. Bank REO list prices usually are reduced every 30 days. Most offers are accepted 3-5% off of list. You offer 10% range may not be countered. Do your homework on values. Most REOs want close to market value if in good condition
0 votes Thank Flag Link Sat Nov 24, 2012
Depends on the type of bank, whether it's a private bank or government bank. For a private bank offer according to the latest market price, but if it's a government bank then offer according to the government rates.
Private Banking - http://www.gtoptions.com/
0 votes Thank Flag Link Fri Nov 23, 2012
I was just at a short sale seminar held by Bank of America. And the average accepted offer is 92% of Market price. Meaning the market price at the time of the your offer. Of course this is an averaged number.So 60% of market is not unheard of. but better to go with the odds and expect to closer to that 92% number.
Also Bank of America acknowledged long closings times of 120 days.
Bank of America is trying to stream line the process and have a approved sale price to eliminate the guess work out of what price will they accept from the start . This is different from now when they accept or reject offers on and individual basis. Meaning even if they previously accepted an offer and the buyer pulled out is no guarantee the will accept another offer at the same price
Web Reference: http://robertsuarez.net
0 votes Thank Flag Link Tue Aug 17, 2010
I would hire a buyer's agent who has experience with short sales, research the comparables, have your agent ask the listing agent where the bank is at with offers. They may tell you that the short sale is approved at X that way you will have any idea of how much to offer. If you need a buyer's agent, let me know I will refer you to someone in your area that specializes in short sales.

Constance Koopman, Realtor
SFR
http://www.constancekoopman.com
612-490-3861
0 votes Thank Flag Link Tue Aug 17, 2010
An update: according to the listing agent, there are multiple offers. Since this is foreclosure priced quite reasonably for the area the home is located, my agent is suggesting that we either go on go above the listing price or make a cash offer for a little less than the listing price. Obviously I do not have that kind of cash, so I will need to get a mortgage to finance the purchase, but at the same time by making a cash offer I will have no mortgage contingency clause in the offer. Given the current credit market situation, would you recommend such approach?

I got pre-approved for the amount I want to borrow in advance, so I kind of lean towards making the cash offer. In a hypothetical situation, what would happen if I submit with cash offer and then be unable to get financing? Is there anything else I need to consider when making a cash offer based on the assumption that I still need to get a mortgage?

Another approach I've been thinking about is increasing the down payment. When comparing the offers, do banks that own foreclosed proparties actually look at the amount of down payment (5% in one offer vs 30% in another one)? Another words, is there any difference from bank standpoint between 2 offers for the same amount that only vary in amount of down payment and thus amout of mortgage? Or is it more like a binary option, meaning you either do cash offer or cash + financing, no matter how much you're planning on putting down?

Thanks,
mike_fl
0 votes Thank Flag Link Sun Aug 30, 2009
Mike,

Our recommendation is to explore all options and do as much research on local real estate as possible. Additionally, your position would be greatly improved with the support of an experienced real estate professional.

Consider attending open houses to both gather information on area homes and meet possible RE agents to support your efforts.

Best wishes,
The EcklerTeam
0 votes Thank Flag Link Tue Aug 25, 2009
Mike,
I purchased 2 foreclosures last year (March and December) and I offered 23% and 28% below asking price respectively and closed. Although I ended up waiting 3 months on the forst one and 6 months on the second one it was worth the wait.

The only thing that you need to ask yourself is, is this property worth more to someone else? If so then maybe that 600k is a good price if everything else around is still selling for 800k and higher.

You don't have anything to lose but time, since banks take forever to answer bids on foreclosures.

Good luck
0 votes Thank Flag Link Mon Aug 24, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer