Home Buying in Palm Springs>Question Details

Dance, Home Buyer in Palm Springs, CA

Do you have to offer full price to the bank on a foreclosed property?

Asked by Dance, Palm Springs, CA Mon May 24, 2010

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9
Hi Dance,
Banks have guidelines of what they will accept.
They are not human.
Think of it as a percentage basis.
Then understand the finances. Cash is king.
Then there is the terms, when it comes to REO's ask for nothing pay for everything close quickly 14 days and get a property.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
harold@socalhomesrealestate.com
http://www.socalhomesrealestate.com
California Department of Real Estate License # 01312992
1 vote Thank Flag Link Thu May 27, 2010
Regardless of the list price, you shouldn't offer more than its current market value (as determined by the CMA and/or appraisal). Although price is negotiable, and you could offer whatever you'd like, your offer will fare better more often if your offer price is based upon something solid (like the current market value). The seller could still reject your offer, and many sellers have rejected these kinds of offers.

Keep in mind, if you plan to get a loan from a conventional lender, then your lender will based the amount lent on the appraisal--regardless of the amount of your offer. Let's say you offered $120K for a property that appraised for $100K, and your lender will lend at 90% LTV of the appraisal. You'd have to put $30K down; yet, you'd only have tp put $10K down had you offered $100K.
0 votes Thank Flag Link Tue May 25, 2010
The purchase price on a Foreclosure is negotiable, so you don't have to put in a full price offer. However, like any other listing, look at the time its been on the market. If it is a new listing, and priced below comparable properties, you can almost expect it to get at least the full price, and often go into a multiple offer situation. In certain price ranges there is a lot of competition out there- and its not unusual for some properties to get 10-20 offers, and sell for significantly higher then the asking price- so just be prepared. Timing is everything and it will be important to submit your offer quickly.

If the property has been sitting there a while, the bank might be more negotiable on the price and willing to accept a lower offer. However, from my experience if the bank just lowered a listing price, they won't be as willing to negotiate.

Best of luck!

Paul
0 votes Thank Flag Link Tue May 25, 2010
Hello Dance: The purchase price on foreclosed properties are negotiable like any other sale. The bank will try to sell it at the best price they can. Be prepared, get a letter of pre-approval from a direct lender, provide them with proof of funds (showing you have the down payment) and work with a knowledgable agent. Most banks along with the agent price the home to sell in 30 days. Typically, if it doesn't sell quickly the asset manager reduces the price until they start getting offers. I am seeing banks putting homes on slightly higher than recommended by the agent so we are seeing some movement in pricing.
I would recommend that you make your best offer and have the necessary documents to present to the bank. If you need help, please feel free to contact me at Capitis Real Estate 760-969-3558. Thanks, Keith
0 votes Thank Flag Link Tue May 25, 2010
You have had a few answers to your question, do I have to offer full price on foreclosed properties. In the Palm Springs market foreclosed propeties are getting multiple offers and are ultimately going for more than asking price. So the answer is yes full price or more unless you want to spend your time spinning your wheels and coming up empty handed each time you put in an offer. Contact me so I can help you find the property you are looking for.

Bob Hunt
Realty Executives Palm Springs
760-578-4003
0 votes Thank Flag Link Tue May 25, 2010
As my fellow Realtors have said "you may offer any amount that you like". But please note that the seller/bank and their Realtor know exactly what the home is worth and they are not going to accept anything less in this market where we still have multiple offers on every decent home. The local market is ever changing but here in Riverside in 2009, many buyers, after putting offers on 20 to 30 homes and still not getting an offer accepted started offering well over appraised value just so their offer (which was one of many) would be accepted.

It's best to ignore the asking price all together and have your Realtor who has a sense of the local market conditions do some research as to the current value of the home and then offer at least that much as soon as you can. This amount may be more or less than the asking price.

Best of luck to you in your new home.
0 votes Thank Flag Link Mon May 24, 2010
The first thing to do is have your REALTOR show you the property. Make notes and take photos of any and all problems with the property and get an estimate on the repairs. Then, have your RELATOR do a Comparable Market Analysis (CMA) on the property. This will tell you what like homes in the area have sold for. If the homes that your REALTOR used for the CMA needed no repairs subtract the cost of repairs from the market value your REALTOR came up with. If they also needed like repairs as the home your considering then no subtraction is needed. This calculation combined with how important it is that you get the house should decide your offer price.

If you are going to low ball a bid send the photos of the needed repair along with the estimate of repairs with your offer. Remember, a bathroom that is in good condition but is outdated is not in need of repair. I’m talking holes in the walls, cracks in stucco, roof needs replacement etc. By sending these items with the offer, you give the listing agent some ammo to try and sell your offer to the bank.

In this market however it is tough to low-ball a property. The banks are still holding their Shadow Inventory so inventory is low and many homes are getting multiple offers. Remember, if you offer too high the home will not appraise for the offer price and you will need to make up the difference between the appraised value and the offer price. The bank wont loan on a home if the value is below the offer price.

Good luck and be smart. There are deals to be had if you are patient and your REALTOR is on top of the inventory.

Regards,

Eric Soderlund
Web Reference: http://www.ESoderlund.com
0 votes Thank Flag Link Mon May 24, 2010
Just like any other property you offer what you think the home is worth. Have a Realtor go over the comps of the neighborhood for comparable sales, and then decide what you like to offer. Good luck and have fun.
0 votes Thank Flag Link Mon May 24, 2010
no. you can offer anything you wish to offer. You can offer more, less, or the same as asked. What happens as a result is up to the bank to decide.
0 votes Thank Flag Link Mon May 24, 2010
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