Buyers are in charge, and you can expect to save tens of thousands to hundreds of thousands of dollars. If the bank refuses, then move on to another property. Continue until you find the bank who realizes that in order to sell, they must reduce. Don't become emotional about any one house, as such attachment will prevent you from being strong enough to move on when the bargain isn't optimal.

Stay tough and stay determined to find a good deal.

Jane,

After reading your last response about paying $94/sq. ft. I would again encourage you to look at new homes if this bank deal does not pan out. I sell new homes in a great location in Buckeye for as little $63/ sq. ft. and you can select your own interior finishes....brand new home, covered by a warranty.

And to all of the agents not familiar with Buckeye, AZ., Forbes magazine rated Buckeye as the 2nd fastest growing suburb in the country. The bank knows this and that could be another reason they are holding out for more money.

Just a thought. Good luck.

Jane:

With all due respect, you're making a classic negotiating mistake. In fact, a whole series of mistakes. Essentially, you're negotiating with yourself, not with the bank. In one of your postings, you wrote:

"Thank You Ryan. We actually received a counteroffer from the Bank, but it was for $100,000 more than what we offered them!? Not much to work with there, and it was NOT a written counteroffer. It was VERBAL from the listing agent to MY agent to ME??? I'm growing impatient with the whole process. First, they rejected our original offer so we upped it more than $35,000, only to get a VERBAL counteroffer for $100,000 more than our offer, and with a request of 10% down. My new question is: Should I counter AGAIN with the same number as my 2nd offer(still $100,000 less than their CO), and add that I will pay 20% down... Do you think they'll look at THAT???"

So, you made an offer. The bank didn't make a real counter offer. A counter is made in writing. They simply said they wanted $100,000 more. So, without a real counter offer, you raised your offer by $35,000. They said they wanted more, with 10% down, so now you're thinking of offering 20%?

Real estate investors have a series of questions they pose to sellers: "What is the least you would accept for an all cash offer if we could close in 7 days?" The seller provides an answer. The investor flinches and responds: "I'm sorry, but you'll have to do better than that." So the seller lowers the offer some. The investor responds: "Is that the best you can do?" The seller lowers the offer again. At no point has the investor/buyer actually countered the offer. The seller simply has been reducing the price.

Case in point: I took a look at a property last week. It was a fixer-upper, FSBO, priced at $400,000. On the first phone conversation, the seller said it was $400,000, but they were negotiable. I asked the "cash...7 day close" question and it came down to $390,000. I asked "Is that the best you can do?" and they came down to $375,000. It wasn't low enough for the deal to work for me, but it'd have been a very good deal for a retail buyer. And I really suspect that, had I negotiated a bit, I could have gotten the price down to $350,000. All without anything in writing.

That's what the bank is doing to you, in reverse. They're getting you to raise your price and sweeten the terms--more and more down--all before anything gets in writing.

A few other comments, also about the strategy you're using. Your agent, you say, says "PLAY their game, and see what we can get." No, no, no. You don't play THEIR game. You play YOUR game. It's a buyer's market. They're trying to sell. Now, they may be unrealistic. They may be inflexible. So maybe you won't end up with a deal. But, in all due respect to your agent, you never, ever, want to play someone else's game. You play your game.

Your comment also touched on one of my pet peeves: the idea that negotiating means splitting the difference. Or as you put it: "so either the Bank will be smart and meet us half way..." Somehow, the American ideal of fair play calls for that, but it doesn't work in real negotiations. And, guess what, the bank knows that. It's already gotten you to up your offer a couple of times. If they finally decide to "meet you half way," then you've already given up a large chunk of your position. Meanwhile, as you yourself note, "the market is going nowhere but down." That means whatever you negotiate today will have to stand up as a good deal next year.

Look, Jane, there are good deals out there. Sounds like your friend may have gotten one. But there are a lot banks with a lot of REOs. There are a lot of short sale prospects. And there are a lot of distressed owners who just want to sell. Don't get hung up on one deal.

Hope that helps.

The purpose of shopping for a bank-owned property is to get a good deal; otherwise, they aren't worth the look. I am aware of many REO's that have gone for $100K less than asking price. As a matter of fact, one home in our neighborhood was listed for $500K, and has been reduced to $299K. It's unlikely that it will even sell for $299K in this housing market. Why? Values are DECREASING, and most sellers simply won't make a profit on their investment.

It's so hard for some people to grasp the fact that home values have FALLEN, and by the end of 2009 the values are projected to have fallen by at least 30%. Why would anyone be willing to pay listing price when the values are projected to fall so much?

Listing prices, realtor evaluations, seller opinions, and appraisals have absolutely nothing to do with market value. Market value is only what someone is willing to pay in this market. If market value was listing price, then the property would have been snatched up long ago.

Make any offer, regardless of amount, on a property according to what the property is worth to YOU. Forget about anyone else, and don't depend on realtors' for advice. They're in the action for their own profit. Take care of yourself and your family, and don't be ashamed to be aggressive.

You have already come up 35K, and your counter is 100K away?
There`s a request for 10% down? From what? 5% down?

Honestly Jane,
I would only give a verbal counter offer also, you do not seem to be a serious buyer, sorry.

To answer your last question.
"and add that I will pay 20% down"?
I am concerned by what you mean, by the word "Down"? Are talking escrow money. I hope I am wrong.
If that is the case read the 7 day addendum.

Still offer 100K less, Right now Banks may let it go for 10% less, than offer, maybe 15%.
Other than that, they will just lower the offer to create a larger buyer pool.

I am sure you know what a good deal is for that home in Buckeye. What does your Buyers agent say.

One last thing, If the bank were to sell you that home at a smoke`n deal. Way below market value, "Free Money". Be very wary, Banks are smart, and REO`s come without Warranties. Buyer Beware.

Good Luck

Please keep the thumbs down coming, my friends. Also take a moment and read the Code of Ethics to decide whether the advice you're providing is consistent with that document.

Jane,

Savings will probably vary depending on much money the bank has lost and is currently losing on the property every month. Whatever your offer is you need to be prepared to wait. A low offer may not garner a response from the bank right away. They might receive your offer and wait (sometimes 3 weeks) to respond. They will wait for a higher offer from another party to come through while you wait for their decision. If you need a home in the next 30 to 60 days I would encourage you to look at completed inventory homes from new home builders. Some offer great incentives including closing costs and your agent will be compensated appropriately. Plus you can take advantage of the low interest rates being offered today. Just a thought. Good luck.

Hi, Jane ... you really need to be asking your agent these questions, since you mentioned the other day that you are working with an agent. You hired them to answer these kind of questions for you and provide you the advice you seek.

If you don't have confidence in the advice they're providing, why are you working with them?

There are no hard and fast rules about REOs no matter what might be said. Each property and each situation is different. Since your agent has the complete information everyone else here lacks, it just may be that their answer is correct.

Good luck!

I have sold dozens of bank owned properties listed for 185-290 we offered 165 and 260 respectively and closed the deal. There are some other circumstances, like days on market, failed contracts,etc that change things in your favor.

The name of the game is BE AGGRESSIVE! You are not going to hurt anyones feelings with bank owned, and buyers are hard to come by! Remember that.

In my opinion, it is not safe to assume anything. The lender already lost money on the property when they foreclosed and are loosing money while the property is still on their books and listed for sale. Their goal is to sell the property for as much as possible and to recoup as much as possible. With a current appraisal of the property, its market value and condition, its market area condition and trends, you have a negotiating tool to validate your offer.

Most REOs are listed at a price determined by a BPO presented by an Agent/Realtor who was then given the listing. As with the majority of current listings, most REOs are overpriced and are sold "As Is". Before you make an offer, I would highly recommend getting an accurate and current appraisal of the property and its condition to help in determining an offer price.