Question Details

Brendan Aust…, Home Buyer in Joliet, IL

Found a home I am interested in purchasing that is a foreclosed home. It is listed for 101k and is a relatively new build.

Asked by Brendan Austin, Joliet, IL Sat Jan 22, 2011

Is the asking price likely a bid for the house in the hopes to drive up the price or is it likely that the bank is just looking to recover a portion that is owed on the house?

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Answers

6
Brendan

That's hard to say. Is this a new listing or has it been sitting a while? If it's new, banks sometimes base a price on what they want to recover and sometimes based on a BPO (Broker's Price Opinion). The smartest thing is to have your agent pull comps and evaluate the property so you can have a good sense of the true market value. Once you have that, you then need to determine your walk-away price so your initial offer is realistic and aggressive if need be. Your realtor is there to help you with your offer strategy.

Oggi Kashi
Paragon Real Estate Group DRE 01844627
Web Reference: http://www.oggikashi.com/
1 vote Thank Flag Link Sun Jan 23, 2011
Brendan,
Difficult to say, your best bet will be to have a local agent research the home, the neighborhood and the bank, and to do it right away. Some lenders do use that strategy, low offering price and selling it to the highest bidder, but without working in the area and knowing all the details it’s impossible to say.
If you're working with a great agent, they will quickly know the answer to your question and be in position to advise you the best way to move forward. If you need a referral to a good agent, I may know one. Best of luck.
1 vote Thank Flag Link Sun Jan 23, 2011
All excellent answers.

A CMA will tell you right away what a reasonable starting point for you to bid is. If the bank did underprice it to drive a bidding war, they are well entitled to that strategy. It may or not work for the bank, what if you end up being the only offer? On the other hand if you do end up in a bidding war, you need to be able to know when to walk away.

Good Luck,

Ray Garcia
617-942-0447
rghomeowners@gmail.com
0 votes Thank Flag Link Wed Jan 26, 2011
Most banks, after doing a BPO, (Brokers Price Opinion) will use that information along with what they were owed on the property to determine listing price. They are not trying to make money just keep their loss to a minimum.
As others stated if this is a good property at a good price it may bring many offers. If it was just listed they will most likely take owner occupied offers for the first 10-14 days. This is especially true if it is a Fanny Mae or Freddi Mac owned home.
Find yourself an agent that has worked with these type of properties. They will have a good idea of how the market for REO's is in your area.
0 votes Thank Flag Link Sun Jan 23, 2011
Brendan,

One thing is certain....the bank will try to get as much for the property as the market will support. If this home is new to the market and desirable, it's hard to tell what the final price will be. On the other hand, if the property has been on the market for an extended period of time, and you can demonstrate a justified lower price, you may be successful in negotiating the price downward.

Typically, the listing prices for foreclosed property is determined by appraisals or BPO or a combination of the two. If there is multiple interest, it's common for the bank to invite interested parties to submit their "highest and best offer" on the home. This information will be used to determine their buyer. This doesn't necessarily mean the highest offer always gets the property. Buyer contingencies and cash compared to financed offers can play a big part in the decision. Lower cash offers have been known to win out over higher financed opportunities.

Your best bet is to work with a real estate professional that will represent your best interests...avoid working with the listing agent.

Good luck,

Bill
0 votes Thank Flag Link Sun Jan 23, 2011
What is your agent advising...in order to make a determination on price, review comps--recently sold similar properties in the immediate area--see what the data suggests and go from there--if it is listed at today's market, or slightly below, multiple offers may occur--your agent can best advise.....
0 votes Thank Flag Link Sat Jan 22, 2011
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