Home Buying in Washington>Question Details

Badiyah, Home Buyer in Washington, DC

What is the discount percentage that banks usually find acceptable when purchasing a bank owned property?

Asked by Badiyah, Washington, DC Thu Sep 4, 2008

Interested in purchasing a REO

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Badiyah: That will depend on 3 things. .
How long has the property been in the market. .(early on, banks aren't willing to budge)? , The condition of the property( the worst it is the more the discount) and finally the present value of the home( if a home just sold for 50K more next door. . they will not accept an offer losing that much money) Get a good tough agent and GO FOR IT!
3 votes Thank Flag Link Thu Sep 4, 2008
Badiyah,

There is no magic formula to determine the amount acceptable for a bank owned property. Like you, they keep an eye on the pulse of the market in which their property is located and use this information to as a guide.

Good luck,

The "Eckler Team"
2 votes Thank Flag Link Thu Sep 4, 2008
The bank will tell you exactly the price they are looking for on a property. What do you mean a "discount percentage"? Amount that you will low ball even further on price when you make an offer?
2 votes Thank Flag Link Thu Sep 4, 2008
Banks are averaging 95% of their listing price in our area of Southern California. If it is a property in a demand area it will go higher than that with multiple offers. Count on it. http://www.socaloceanviews.com/professional1.shtml
1 vote Thank Flag Link Thu Sep 4, 2008
My advice to you is if you are interested in a property - don't hesitate! Get your Offer in and start practicing. Odds are, you will be out bid and the process is lengthy. But, you won't know how it works until you start seeing it for yourself. So many Buyers sit back and "wait" to find out that someone else had a jump on them and purchased a home they really wanted, at a price they would have loved to buy it for. Generally speaking, when an Agent has the Short Sale listed at a particular price, THAT is the price you should put an Offer for. Otherwise, you are running the risk of just being another Low Ball offer that the Bank has to look at. They will pick the most favorable Offer (Best Price, less Contingencies, Loan Down Payment, Earnest Money, Easiest Close, etc...). Good Luck!
0 votes Thank Flag Link Fri Mar 13, 2009
Dear Badiyah,

Comments already made by my colleagues are good...it all depends on the bank. However, here's something that you may also find useful...it is a notice to our office recently received from Bank of America about their policies regarding "short sales" in our area.

A short-sale is not exactly the same as a REO purchase from a bank of a bank-owned property, but instructive. A short sale is a sale that takes place before the bank has actually 'foreclosed'; the owner is selling, but is behind on payments to the bank, so the bank and/or mortgage holder(s) get involved in the sale and they have a lot to say. (Generally because the sale will probably not cover the principal owed to the banker(s). So they are a significant party in deciding whether they will accept the sale, and consequent 'hit').
___________________________________________________________________________________

We just received communication from Bank of America outlining their new Short Sale Policies which take effect immediately, including commission adjustments on some files. The communication came from the Risk Operations Manger of their Loss Mitigation department, here are the specifics:

1. Short Sale will be declined if the contract is below 90% of Bank of America's value. They did not specify how the value is established but generally speaking it will be either a BPO or appraisal(s).
2. If Bank of America is expected to take less than 50% of the outstanding balance, the Broker's total commission cannot exceed 4%.
3. Loss Mitigation associates now have the authority to approve short sales all the way down to 70% of the outstanding balance.
4. Officers and Team leaders now have the authority to approve short sales all the way down to 50% of the outstanding balance.
5. Anything lower than 50% of the balance must have Unit Leader approval.
____________________________________________________________________________________

Hope this adds a bit more for you. Cheers--RICHARD--
0 votes Thank Flag Link Fri Oct 3, 2008
It varies depending on the property, neighborhood, time on market, condition of property, etc. Only one way to find out, make an offer!
0 votes Thank Flag Link Thu Sep 4, 2008
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