Home Buying in Chattanooga>Question Details

Larry Barlow, Home Seller in Harrison, TN

When bidding on a foreclosure what is a reasonable bid? 20% below the asking price or more?

Asked by Larry Barlow, Harrison, TN Fri Feb 20, 2009

When bidding on a foreclosure what is a reasonable bid? 20% below the asking price or more?

Help the community by answering this question:

Answers

14
BEST ANSWER
While we all know the Real Estate market has been hit hard by the economy and the whole country is eager for better times, with all do respect to "Bad Time To Buy", the facts do not support the suggestion to rent (especially in the Chattanooga Market). As we all know, ALL REAL ESTATE IS LOCAL. While some areas of the country may still be depressed, others (like Chattanooga) are doing just fine. This market (Chattanooga) hit bottom last November. Volume and prices have been edging up since then and smart buyers are locking in on the low prices and great mortgage rates while they are still low.

Let's look at some facts SPECIFIC TO THE CHATTANOOGA MARKET:

* The sales volume of homes sold in 2008 was down 18% BUT the median price of the homes sold were down LESS THEN 1%. Not bad when surrounded by a national market that did much worse.

* The prices of homes over the past 5 years in this market are UP 10% (see below for details).

* The median price of a home in Chattanooga in 2004 was $144,196. In 2008 that price was $159,995. So why "Bad Time To Buy" in Chicago was paying rent, the folks in Chattanooga gained almost $16,000 in equity in the value of their home.

* The ONLY year we saw any decline was between 2007 & 2008 and current sales records show we bottomed out in November of 2008 and are now edging back up.

You might want to check out this web site which clearly spells out the advantages of buying versing renting:http://righttimerightmarket.com/index.php?/rentown.

Conclusion: I don't know the Chicago market. Maybe it is best to rent there, but if you are planning to live in the Chattanooga area, it is clearly best to buy.
0 votes Thank Flag Link Sat Feb 21, 2009
Larry,

All the answers are good. So much depends on your plans, wants and needs. There is no "magic" number.

Foreclosures are already priced low, the price drops are triggered more by the calendar than by offers. When offering to buy a foreclosure you are working with someone behind a desk that has no objective interest or understanding of the market.

Work with a professional agent to construct an offer that will meet your budget and allow you to achieve your objectives.

I trust this helps,
Jeff
-- Jeff & Patrice Wishmyer
Prudential RealtyCenter
wireless: 423-503-6953, 423-424-8749
email: wishmyer@realtycenter.com
http://www.chattanoogahomes4sale.com
http://www.signalmountainhomefinder.com
1 vote Thank Flag Link Fri Feb 20, 2009
Here on South Florida's Treasure Coast buyers are snapping up foreclosures. Multiple offers are being placed on better homes. That said, if you find a house you like, put in your best offer as you may not get get a second chance, especially if you go in with 50% less than asking price.
0 votes Thank Flag Link Fri Feb 27, 2009
Your offer should be based on the situation. If it is a good house with many offers than bring your best. If the property is a piece of junk then offer less. Again, the offer should be based on a case by case situation, a good agent will help you with that process. In regards to the guy that tells you just to rent. The only way you know where the bottom is, is by looking at it in the rear view mirror. No one knows where the bottom is and when it may turn. It is a good time to buy property in the Chattanooga market and in any market in fact.
If you have any questions about foreclosures, investment properties, or just about the market please feel free to call (423.505.8775) or email. (MarshallCasselman@remax.net)
0 votes Thank Flag Link Fri Feb 27, 2009
Larry,

Any bid, foreclosure or otherwise, is best supported by accurte local real estate information that supports the offer.
0 votes Thank Flag Link Fri Feb 20, 2009
Larry: You should just rent - prices will be going down for a long time.
0 votes Thank Flag Link Fri Feb 20, 2009
Larry,
I know at least in our area that the banks' new strategy is to price the home in a range that will garner multiple offers, some over list price. They are no longer sticking to their guns as much by trying to price high and go down as necessary. For example a home they think is worth $200,000,even in today's market, may start off listed at $150,000.

As a result, I've got a lot of disappointed buyers who are losing out on bid after bid because they expect the banks to just give homes away. The thing is, is that some banks are offering homes at "give away" prices already and they just want to price them to move fast

Since real estate is highly localized, your best bet is to align yourself with a buyers agent who specializes in your local market, and make use of their expertise to help you get the home you want at a fair price. Maybe you have to bid full price maybe you dont. Best of luck!
0 votes Thank Flag Link Fri Feb 20, 2009
Don't know what the market is doing the TN but where I am the banks are setting the price pretty low.
Half of the bank owned are going for more than the asking price. They set it low and expect several offers within a few days. Don't expect that they will take a low offer as the agent from Plano said have an agent help you decide on a price.
I have recieved offers that the agent stated that the buyer was willing to go as high as their best offer "up to such and such a price. Also we had to prove that there was an offer that high. This way you can make a low ball offer but let them know you are willing to go higher if their are other offers.
0 votes Thank Flag Link Fri Feb 20, 2009
Plano is right Larry. I have even seen the final winning price ABOVE the asking price for a desirable property. Look at this logically. The bank doesn't want to be in the Real Estate business, they just want to limit their exposure, reduce or eliminate the liability and get out of the deal as best they can. As Plano says, they usually price the home at or just below market value OR they price it at their exposure level (what was originally owed on the property). The exception would be a depressed property that would be hard to sell. In this case, the bank just wants out of the deal even if they stand to loose money. Bottom line is they want to come out without loosing money and/or loosing as little as possible. Get a good Realtor to check out the bank exposure, do a CMA (Comparative Market Analysis) to determine the properties estimated value and go from there. There are other considerations you will want to make before making your final offer. Your Realtor can advise you there. If you don't have a Realtor or need further advice on this, feel free to give us a call.

Joe Folsom
Phone: (423) 443-4638
eMail: JoeFolsom@ModernRusticLiving.com
0 votes Thank Flag Link Fri Feb 20, 2009
Reasonable bid is 20% below asking price plus 3% credit from seller to buyer for buyer's closing cost. It really depends your buyer's situation.
Web Reference: http://www.greenfieldlg.com
0 votes Thank Flag Link Fri Feb 20, 2009
Every property is different. If the home has just come on the market and is priced correctly, the bank probably won't sell it to you for 20% off. They prefer to wait and see. If you are willing to risk losing it, feel free to offer the 20% less, but don't be angry if you don't get it. If it is a home that has been sitting around for months, 20% low on the initial offer is not a bad idea.
0 votes Thank Flag Link Fri Feb 20, 2009
There isn't any rule of thumb. Many foreclosures are already priced competitively and if you make too low an offer, someone who recognizes the value of the home will purchase it before you get a chance to make a higher offer.

If a property has been on the market for more than a couple of months, and you aren't emotionally attached to the purchase, it usually won't hurt to offer 10-15% less than the asking price. Very few sellers of foreclosures will accept an offer more than 5-10% below the asking price if the property has just come on the market. They are willing to hold off for at least a few weeks to see if they get a better offer.

HUD will almost never accept an offer more than 10% less than the current asking price.
Web Reference: http://www.JuliaOdom.com
0 votes Thank Flag Link Fri Feb 20, 2009
20% below asking price plus 3% credit from seller to buyer for buyer's closing cost.
Web Reference: http://greenfieldlg.com
0 votes Thank Flag Link Fri Feb 20, 2009
Foreclosures are usually already at very low prices or at the lowest price the bank will accept. Have your agent (hopefully you have one) look up the comps in the area and if the house is already below market then you may lose the house if you offer 20% below to someone else who will offer full asking price.
0 votes Thank Flag Link Fri Feb 20, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer