Home Buying in Branford>Question Details

Stacey Busher, Home Buyer in Branford, CT

What is appropriate for offers on a bank owned foreclosure with little interest??

Asked by Stacey Busher, Branford, CT Tue Jan 14, 2014

We are interested in a property that doesn't have any other interest from buyers, but the bank hasn't budged on the listing price in the 4 months it's been listed. Also, they are going all over the place with their counter offers. Should we continue to stay interested or walk away? We would need to do work and buy appliances, as the property does not include any.

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Answers

8
Most banks review the listing price every 30 days and adjust if still not sold. Most banks do not counter offer at all. When they do it is a percentage of the offer and not always what they will accept. Your offer should be based on teh current market value less repairs. it should not have any contingincies and close in 30 days for your best chance to get it accepted.
0 votes Thank Flag Link Wed Jan 15, 2014
Scott brings up a good point on contingencies. Banks want the offer to be void of personal property in most cases. The only contingency they will accept other than inspections (all done at Buyer's costs for information purposes only) is your mortgage contingency. That's the reason you need to provide written documentation about your ability to qualify for the loan that you are needing. You are not really dealing with a warm blooded Seller when dealing with a bank or institutionally owned property. Another thought on pricing is that the bank has in their position opinions of value from agents and appraisers supporting the selling price. Their lack of price change may be simply due to the fact that they expect the natural increase of activity in the market now that the holidays have passed. The current rate dip is bringing Buyer's out of the woodwork so don't delay pursuing the property if you really like it.
Flag Wed Jan 15, 2014
The answer to this will depend on the lender, but in most cases, they are looking to get fair market value adjusted for condition. How far they are willing to go from that is contingent on a lot of internal factors that you have no way to know.
The best way to negotiate a deal like this is with data to back up your position. Your agent should be showing them appropriate comps to justify market value, along with estimates of the work needed to restore it to livable condition. If they are not countering with a number somewhere in this range, then you probably need to wait for a while until they are willing to see reason.
Make sure you are working with an agent that is familiar with REO properties and negotiating with banks. It is very different than negotiating with private individuals.

Godd Luck!
Dan Ross
Century 21 AllPoints Realty
0 votes Thank Flag Link Wed Jan 15, 2014
Dan, good stuff. I learn so much from reading these questions and answers.
Flag Wed Jan 15, 2014
Dan, good stuff. I learn so much from reading these questions and answers.
Flag Wed Jan 15, 2014
Hi Stacey,

Keep in mind that the listing agent works for the Seller, not you. You deserve to have your interests represented and I trust that you have a Buyer's Broker working for you. You can do that with no "out of pocket" costs. If you have been going at the home purchase alone, then finding a good agent is easy. Check profiles, ask friends and relatives for their recommendations and most important, talk to a few and you'll know when you've found the right agent based on their communication style, personality and experience. The best agent isn't a bull in a china shop or not necessarily the agent who's overextended (that's important if you have lots of questions).

On pricing, what a Seller asks is one thing and what you are willing to pay is another. Your ability to pay and -needs to be defined first. Having a financial plan first before you pursue a property is a must. The home still being available doesn't mean that it's over priced necessarily. There may have been offers rejected by the bank for either price or personal reasons. A well structured offer is the key to getting the property at the lowest price. Any offer can include inspection terms. Most bank owned properties are as-is so the inspections are for information purposes only to determine if you want to proceed with purchase or back out of it. I have seen lenders make some repairs if the Buyer's mortgage appraisal included them in the appraisal and if the financing the Buyer is using requires such repairs. Feel free to reach out to me if I can help further.

Hope this info helps.

Greg Hanner, Broker, REALTOR, e-Pro
http://www.GardenRealty.com
0 votes Thank Flag Link Wed Jan 15, 2014
Hi Stacey,

Keep in mind that the listing agent works for the Seller, not you. You deserve to have your interests represented and I trust that you have a Buyer's Broker working for you. You can do that with no "out of pocket" costs. If you have been going at the home purchase alone, then finding a good agent is easy. Check profiles, ask friends and relatives for their recommendations and most important, talk to a few and you'll know when you've found the right agent based on their communication style, personality and experience. The best agent isn't a bull in a china shop or not necessarily the agent who's overextended (that's important if you have lots of questions).

On pricing, what a Seller asks is one thing and what you are willing to pay is another. Your ability to pay and -needs to be defined first. Having a financial plan first before you pursue a property is a must. The home still being available doesn't mean that it's over priced necessarily. There may have been offers rejected by the bank for either price or personal reasons. A well structured offer is the key to getting the property at the lowest price. Any offer can include inspection terms. Most bank owned properties are as-is so the inspections are for information purposes only to determine if you want to proceed with purchase or back out of it. I have seen lenders make some repairs if the Buyer's mortgage appraisal included them in the appraisal and if the financing the Buyer is using requires such repairs. Feel free to reach out to me if I can help further.

Hope this info helps.

Greg Hanner, Broker, REALTOR, e-Pro
http://www.GardenRealty.com
0 votes Thank Flag Link Wed Jan 15, 2014
"No Interenst" & "Counter offers all over the place" suggest there is MUCH more to this story.
Since no other informatoin is provided (such as property link) the only advise to abide by is:
"Don't pay a penny more than you think it is worth."
That is not complicated.
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Of course we know your're responding to all those ads that talk about foreclosures available to 60% of market value and you thought that was available to the consumer.
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You should be turning this question towards your REALTOR. They know the foreclosure rules and the latitude the owner has at this time. There are other things the REALTOR knows that would prove beneficial, such as they can SEE the property, the situation and condition. Someone in that position would be better able to respond to your question rather than strangers on the internet who are provided any supporting documentation.

Best of success.
0 votes Thank Flag Link Wed Jan 15, 2014
If you really want the home and feel it's fairly priced I would offer full or over list especially if there are multiple buyers. If you feel it's over priced I would have your agent, if you have one, talk to the listing agent to see where the bank came up with their numbers. Go in with knowledge and comps to show you know the market. Don't submit an offer that you're not comfortable with. Good luck.
0 votes Thank Flag Link Wed Jan 15, 2014
Stacey,
What does your agent think? If the house is overpriced, ignore the list price and make an offer in line with the value you place in it. The bank will either accept, counter or reject outright. Making an offer is the only way to know whether they will take it. If you wait for the bank to lower the price, you may find yourself in a multiple offer situation.
0 votes Thank Flag Link Tue Jan 14, 2014
Stacey,

As to whether or not you should stay or walk away, that is totally up to you and since I am not your agent, and especially since I don't know your situation, I will certainly not try to answer that question. Here is waht I can tell you and it should help you. The bank has a lot of insurance (its not really insurance but the same principle) that partially covers their bad debt so they already have a break even point that is is calculated to the point they know at what price they can actually not sell the house and make more than selling it. At the moment, the problem is even worse on a national level because of the fallout from the housing market crash a few years ago. Many of the homes being foreclosed on are being done so by banks that purchased the debt......actually the government forced them to take over the debt from the banks that failed (Bank of America was forced to take over most of Country Wide's mortgages)....but that did add money that would be given back to the banks (ultimately from the taxpayers) for homes that do not sell. This can seem confusing but it is important to understand that the banks are not in a position where they have to sell the houses for whatever they can get. Think of it like a farm subsidy..........the crop has to yield a certain amount or they are better off not growing because they will take the subsidy. I had a deal fall apart because the bank needed $3,500 more than the $110,000 the buyer was offering.
0 votes Thank Flag Link Tue Jan 14, 2014
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