Banks don't typically get offended with offers they've seen it all.They will attribute your low offer to either in experience or too much time on your hands.l.o.l hOWEVER IF YOU ARE SERIOUS ABOUT THIS PROPERTY CHECK TO SEE WHAT IT AND OTHERS SOLD FOR IN THE PAST.i can research it for you or you can do it your self. rob

Hey you never know what they'll accept Heres the formula to use on REO properties take the (ARV) after repair value and multiply it on your calculator by .70 once you have that price have your contractor estimate the total repair cost and subtract that from the previous calculations givin

Felicia:

In the below 200K price point, I would say you could easily spend 40K on these items with labor. Two Bathrooms (I assume), appliances, landscaping and flooring. I would start in the 130's and see what happens. Especially if they have been on the market for 6 months or longer. This is based on the info you have provided, and please keep in mind I am in Cols. not your market.

Good luck with your offer. Dont worry about hurting their feelings. The worst they can do is say no..

Banks don't have feelings. Low ball it.

Felicia, I have worked the Stark County market for over 20 years and besides being a broker I am also an investor myself and teach real estate investing to many active investors. You have received some very good answers but there are a couple other things you should consider. First, there are financial limits on the amount of repairs that an FHA 203K loan can go; please check with your lender as these amounts change over time as do the other program requirements. Based on what repairs are needed, it is questionable from your description whether the loan will cover the improvements you need to make. You will have to get repair estimates in order to proceed; the 203K loan program has guidelines of how this has to happen, so again check with your lender. While it is not required for you to hire a contractor to do the work, (you can do it yourself) you nonetheless have to show numbers to FHA to get the loan approved. Second, my guess is that when you are done that unless you get a real low price on the home, you wont have gained anything financially, as the repairs you indicate that are needed could ultimately put your ARV (after repaired value) above the market. Most investors wont look at something like this unless they are assured of at least a 10% profit; they typically want more if the risk seems high. We have over 200 experienced investors in the Akron-Canton market looking for deals daily and frankly if this was a deal, it likely would have been bought by now. So you are correct that the properties are overpriced. And it is true that ultimately this home WILL sell to someone, so making a low offer is fine. Plenty of banks want repos like these off their books by the end of the year, so usually December is an excellent month to buy. I offer a 25% commission rebate to my home buyers, (most agents do not offer commission rebates because their brokerages prohibit such) so when you are ready, let's talk further. Don French, Broker, Lake Effect Realty 330-327-1188.

Unless an agent has extensive experience working with investors, then s/he most likely will not know how to properly analyze each property. Either work with a realtor who does have this experience and knowledge, or work with another investor to help you to set everything up properly.

Felicia - get an agent, get an agent, get an agent. I JUST replied to a question from someone telling a horror story about a transaction they are in with no agent and they are regretting it big time. Please, get an agent.

Okay... enough with that. Next - you can't insult the bank.

Next....present the contract with comps - both in "like" condition and finished, and then back out your costs to fix the place up. Include the increased cost for that type of loan (yes, they are more expensive), and the "carrying costs" - meaning the money it will cost you to own the property for the 1, 3, 6 months it will take you to finish it. It sounds like there are no certificates of occupancy or whatever they call them in your area - make sure you know exactly what will be required for that. Not knowing your area, I would also be concerned about fees to be paid to the county, HOA, transportation dept, etc. that you may not be aware of. Some areas do require impact fees at completion.

Get an agent.

Hi Felicia,
Don't worry about insulting the bank! The biggest insult that any seller can receive is being ignored--i.e. NO OFFER!.
You started your question off with the heading of a "LOW BALL OFFER". Don't confuse a low-ball offer with a realistic offer that reflects the current market conditions, current property condition and how much will be required to make this home habitable.
When the properties have been sitting for 6 months-that should be telling the bank that they are overpriced.
What your concern should be is being able to have the houses appraise at the price that you will have in the home including your 203-K funds.
Your best interests will be served if you have your own agent-YOUR AGENT WORKING FOR YOU! The agent that has the lsiting is working forthe bank. He is required to be "fair & honest". But, it is not his responsibility to work to get you that home at the best price!
If you do not have an agent representing you--GET ONE!
If I can be of assistance to you, please give me a call. 440-487-2193.
e-mail at jwirsing@kw.com

Felicia,

It sunds like you all ready have most of the information you need to present an offer. Our recommendation is that you cost out what will be required to put each home in acceptable living conditions(not high end) and deduct this amount from the $179,000 to $200,000 range that currently exists.

Another helpful factor is to provide comps and information that will suppport your offer. Banks are not in the business of losing money and have staff that monitor the local real estate market. They will have an idea of what is reasonable for the current local market. They will also have an idea for the cost of completing a bathroom or kitchen so inflated high end furnishing numbers would likely not be acceptable. Keep it real and find an agent to work with you. You need someone to be in regular contact(3-4 times weekly) as well as manage the other aspects of a transaction.

Good luck,
The Eckler Team

Hello Felicai, I hope you are working with a Realtor. We know the comps in the area and some of us have been involved in construction and know pricing for improvements. You cannot "insult" a bank so do not worry about that, but there are many areas where you can make a mistake with the banks and get into contract problems. The FHA 203K is a great plan for a rehab.