Lots of good answers here and I would suggest the following to help put some realistic expectations in place. Have your agent perform a power search through MLS and add remarks as one of the filters. On the remarks filter search for Homepath and look at only Homepath solds going maybe 6 months. Your broker can then take those results and pull a price and days on market analysis.
For example I just ran this in Broomfield going back six months with no filter on price and had 15 results. Based on these 15 sales my price and DOM analysis tells me the average discount off original list price is about 10% and discount off sold list price is about 4.5%. The average days on market is 60.
The same search except in NW Denver gives an average discount off original list of about 14%, avg DOM of 103, and this is based on 13 sales.
Every area is different, but this approach might give you a better idea of what kind of "deal" to expect on a Homepath property. Good luck with the purchase.
Unfortunately, in Northglenn we were able to get price and closing costs but not anything else so we went on to a HUD property. I do not think there are any clear cut answers but as more people get into the market this spring, negotiating will be more difficult.
The answers below are all good. However, I would like to chime in on statement about the Denver market having "REALLY softened of late". Did you know that the Denver Metro Market's AVERAGE Home Price increased 7% from JAN 2010 to JAN 2011? Number of transactions are off significantly, but good homes priced well in good locations move quickly. FYI, the increase in average price was driven by increased sales of high end homes.
Fannie Mae holding tight to a price probably has more to do with their perceived value based on their appraisal/BPO (Broker Price Opinion)... just like a private individual seller would. My advice to answer your question: Keep Trying. I've often gone 5-7 rounds of negotiations with banks. We didn't get and weren't looking for a 20% discount like your example, but we did shave thousands off the asking price.
FYI: Fannie Mae has now come down 40,000 on their price, the Realtor submitted a BPO to FM stating that my initial offer was much closer to the true value, and I will end up saving almost 50,000 on the original list price in a market that is not hard, in fact it's predicted to be one of the softest markets in the country this year.
John R Roberts - The reason that the average home price has INCREASED is because home sales above $1,000,000 have not softened, they are usually inelastic to the economy - and less people are buying homes. Most of the homes I began looking for when I began my pursuit of a home in Colorado are STILL on the market, almost 365 days later - and brokers are either giving their buyers bad advice or...it's just bad advice.
What was your Buyer's Agent's valuation of the home? Fannie Mae has done their homework and cruched numbers and had other professional Realtors give them BPO's (Broker Price Opinions). They don't normally just throw a number out there that is way over market value for the area, size, and condition of the home. If I knew the home I would have a better answer. What area of town is it in? But in general all banks have stffened up lateley whether they are REO's, short sales, Fannie Mae or Freddie Mac.
The market in Denver is probably stronger than you think. Values are going up and not down. The distressed home market is very strong in Denver and these organizations are all severly short staffed and don't have time to deal with low ball offers. You are right though about the 'Go away' statement. When I have gotten low ball offers on my listings I have often had the Seller either counter at full price or tell the buyer 'go away and come back when you get serious' with no counter. Our time is our most valuable asset and we can't afford to waste it this way.
Robert McGuire ASR - 303-669-1246
Your Castle Real Estate
Keep in mind that banks have a well defined process for establishing their "asking price" that includes appraisals and BPO's. These professionally established second party values normally take into consideration the home's flaws...bad roof, no appliances, vandalism, etc. but are not always "spot on."
If you are indeed serious about this property we would recommend resubmitting another offer. Be sure to make this one a true reflection of the current local RE market but that if you have proof that their number is not accurate, submit this information in detail in support of your offer.
Banks can be reasonable but if you take a rediculous position they will likely return the favor. Keeping your offer real and providing supportive information may get the results you are seeking.
Aren't you the attorney form Chicago that wasn't sure of whether or not you needed a buyer's agent? I am guessing you didn't hire a buyer's agent thinking you would be able to get a better deal and hence that figured in to your negotiation. If that is the case, it might be time to look into hiring one as they can help you structure a strong offer with price and terms that the asset manager will seriously consider.
Look at it this way: A good agent processes 24-48 transactions/year. Multiply that by the number of years they have been in business and even an agent who has had only 2 years experience should have processed at least 48 transactions-if they are good and serious about staying in the business. I would suggest an agent with more experience as you want to see a lot of value but no matter how you look at it the experience of 40 or more successful transactions can be invaluable when negotiating in this market. The average person buys 4 or 5 homes in their entire lifetime- not quite the same volume of transactions. And I might add if you did end up hiring an agent it might be time to get a different one.
Not knowing anything about the property or the location I can not reasonably speak to the offer that you made, as there are a lot of factors that would affect the value of the property and the listing agent and asset manager's perceived value of the property. Your offer might have been too low or it might not have been packaged well when it was sent to the seller's agent or it might just be an unrealistic asset manager. However, in my mind your rational was spot on - if I get an offer or a counter to an offer I have made for a buyer that is within what I call "striking range" I always counsel my client to "split the difference" even on short sales and REOS. Unfortunately not everybody looks at negotiations this way and, I have had investor clients make cash offers on properties that were turned down - typically after weeks of haggling only to have the seller's agent call me and ask me to resubmit because the asset manager was now "motivated." If you are not working with an agent and you need some help/coaching we would be happy to talk with you and offer more suggestions
Either way good luck and I hope you get the home you really want here in CO
Carole & Greg
Fannie Mae Homestep properties are great deals and worth targeting. they have good incentives and are often repaired to sell
I hope you get the house if its in your best interest!
The Kinslow Team LLC
Coldwell Banker Residential Brokerage
Having bought several and put in too many Fannie Mae offers to remember, my experience is they will reject low offers and continue to reduce the price. The reason is that Fannie Mae (and Freddie Mac) is a publicly traded stock with shareholders to appease. Which I have learned from listing brokers associated with Fannie Mae (Freddie Mac, and Indy Mac) is that there must not be a high discrepancy of what the list price is and that which Fannie Mae accepts as an offer. The listing broker priced the home according to the market, the BPO came in somewhere slightly above or below the list price and Fannie Mae is content. When low ball offers continue to stream in it signals a price reduction. Keep in mind that if you continue to watch that Fannie Mae property and it continues to sit on the market, there will be slight price reductions until it finds that buyer willing to buy at that price. So if you really want this home (for whatever reason, investment or owner-occupancy) keep an eye on it and continue to put in offers when the price drops. Welcome to investment game.
On the other hand they know that the national average is 5% off asking and you've asked for 20% off. If they are getting a lot of activity, if the negotiator has something to prove or there's myriad other reasons that you guys may be too far apart. I say try again. Good luck.
Your agent should be able to supply this information so that you can make a reasonable offer, backed up by the facts necessary to prove that it is reasonable.
Your Castle Real Estate
Be persistent, be thorough, and be reasonable. Make a reasonable retturn on your investment, but don't try to 'steal' from the banks. Remember, the bank is trying to cut their losses, too.