Home Buying in Davenport>Question Details

jochristian, Home Buyer in Davenport, IA

When bidding on a foreclosure, is the bank expecting the asking price or is it OK to bid lower?

Asked by jochristian, Davenport, IA Sun Aug 19, 2012

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Mickey Turner’s answer
JO,
Before the home was listed with a Realtor a broker price opinion was done that arrived at the price. Ideally that is what the bank would like to get. Lucky is correct some homes will go for more than the list price while others will go for less. The fewer days on market for the home the closer to list price it will sell for and the longer days on market the less they will receive. That is the norm but there are always the exceptions. A Realtor will be able to help you assess the home and aid you in making an offer that will hopefully acquire the property at a price you will be happy with. Good luck.
1 vote Thank Flag Link Mon Aug 20, 2012
J.O. Christian,

Your bid should be a reflection of a combination of your motivation and the current market value of the property in it's current condition.

Recently, a foreclosure property that was listed at $175,000 in Davenport got multiple offers, none of which were at or below list price. It went for around $290,000.

Another foreclosure that was listed at $164,900 in Colona, IL is now pending for a substantially higher selling price than listing price..

Yet another foreclosure in Bettendorf that is listed at $91,000 went for less than the listing price with my Buyer.

As you can see, you cannot answer your question definitively either way.

You should talk with a Real Estate Professional about Market Value for the property you are interested in. Only after studying the Comps provided should you determine your Offering Price based upon YOUR motivation.

Hope this helps you make an Educated decision.

Good Luck!

Lucky :)
2 votes Thank Flag Link Mon Aug 20, 2012
Usually banks expect an offer at about 90% of BPO (Broker Price Opinion) and a net of 80% to 82%. So, have your real estate agent give you an estimate of market value, and start your bid at about 20% lower than current market value is. Asking price on a foreclosure is usually what a BPO suggested.
0 votes Thank Flag Link Sun Aug 19, 2012
Hi Jochristian,

Absolutely! A foreclosure's bidding process is slightly different than an arms-length transactions' bidding procedure. It all depends on who the bank is. Most of the time you write your offer the same way you would any other offer. With foreclosed homes owned by HUD, Fannie Mae, Freddie Mac, Homesteps, et cetera, they have their own systems designed for submitting offers. When your offer is accepted, you have a certain amount of time to send in your purchase packet.

There is a misconception that foreclosures can be purchased for pennies on the dollar. While in some cases that is true, that is not typically the case these days. Today, incentives are being offered to owner-occupied buyers (I.E. - Freddic Mac "First Look" incentive), delaying the process for investors to purchase these homes as to allow owner-occupant buyers to bid on these homes first. Most of the time, the bank prices the home in "as-is" condition, and rarely reduces the price, unless the home has been on the market for a long time. Usually the bank has a certain number they need to net in order to close. For example, about one month ago, I wrote an owner-occupied offer on a HUD. The offer was approximately 80% of asking, and was rejected. But I received an email from HUD stating the exact number HUD needed to net in order for our offer to be accepted. Although HUD told me their bottom dollar, it was still an unacceptable figure for my buyer, and we continued to look at other homes.

There are an influx of buyers looking to snatch these homes up, when in all reality, this influx is creating bidding wars between rather than getting homes for 50-60% of asking! And if you are an investor in a multiple offer situation, competing against an owner-occupant offer, the chances of you winning are greatly reduced.

If you need assistance, or wish to speak more in person, please don't hesitate to call me at 309-948-3656, or send me an email at alexwolking@kw.com. I appreciate the opportunity to help!

Thank you,

Alex Wolking
REALTOR® Licensed in Iowa
Keller Williams Realty Greater Quad Cities
1225 E River Drive, Suite 110
Davenport, IA 52803
0 votes Thank Flag Link Sun Aug 19, 2012
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