Home Buying in Berwyn>Question Details

Bubbles, Home Buyer in Berwyn, IL

how much are banks willing to go down on a house? people always want to negotiate the price?

Asked by Bubbles, Berwyn, IL Fri Jan 7, 2011

like a house hope it will some what go down in price

Help the community by answering this question:


In my experience, banks are more negotiable on price when the offer is cash or has a short closing date. Of course, in a multiple offer situation, the bank is less willing to negotiate. Look for properties that have been on the market for a long time--the banks usually are more willing to accept lower offers here than on "just listed" properties. Good luck.

The information in this answer provided by Attorney Ranj Mohip is general information and is not intended as legal advice, nor does the attorney intend to create an attorney-client relationship with any reader by answering this question or otherwise contributing as a member of Trulia.com.
3 votes Thank Flag Link Fri Jan 7, 2011
Bubble, I have a close friend in Tinley Park, after a quick chat with her and some research on the good old internet it seems that many home sales in Berwyn are dominated by REO’s and Short Sales, we know historically Short Sales have a closing ratio of less than 50%, which means that for 50% of the people that make an offer, waste their time and energy looking at those types of homes. I would say the 50% of people who have success in this type of transaction; 100% of time work with a buyers agent who represents their best interest, and must have 150% the patience that everyone else has. Often, the price you offer, will be countered from the lender in a short sale situation so you need to pay close attention to your Realtors advice and recommendations. In terms of REO’s we see that Berwyn’s home values they have dropped from a peak in Q1 2006 of $260K to $142+/- Q3 2010. Or 46% decline. Reference: http://www.city-data.com/city/Berwyn-Illinois.html With that type of decline, I would suggest that everyone and their mother who wanted a home in the last 5 years that couldn’t afford it now, can. A properly priced REO should go under contract in 30 days or less. Lenders desire to get a bad asset of their books is a high priority, so they don’t market homes overvalued, they market them for actual Fair Market Value, or slightly less, to encourage multiple offers. Depending on where you are looking to purchase in Berwyn, and if it is a Short Sale or REO, would greatly depend on the offer price you consider. If you do not have a great real estate agent to work with I have all the confidence in the world referring my colleague to you. She is a great lady, she has a lot of experience working with buyers, she is a native of the area, and she makes everyone very comfortable she works with. I know her from growing up in Naperville, IL, and then knowing her from our family’s financial advisor and spending time with her a different family functions.
PS. If you have found this information to be insight and helpful please mark it as best answer or thumbs up. Thank you.
Web Reference: http://www.house-guy.com
1 vote Thank Flag Link Sun Jan 9, 2011
often those properties are priced to encourage multiple offers which drive the price UP! So have your agent run the numbers and see what properties are selling for in that area. Based on how much you want that home, you run the risk of losing it by lowballing.. good luck
1 vote Thank Flag Link Fri Jan 7, 2011

This depends on a number of factors that a local real estate professional could assist you with. If the banks asking price is a true reflection of the local market activity and the overall condition of the home, and it's been on the market for a short time, you can expect the bank to remain solid with their price.

We have found that if you can justify your offer as being a valid and fair price, the bank will be more receptive to listenting to your numbers. Working with an experienced professional will benefit you greatly.

Best wishes,

1 vote Thank Flag Link Fri Jan 7, 2011
Hi Bubbles,

There is no hard and fast rule. Base your offer on the recent sales in the niehgborhood (a comparative market analysis) and the condition of the home. You can always try a low offer but while you are testing that out someone else could come right in and pay full price...and get the home you have chosen for you. If that happens not to worry there will be another!
1 vote Thank Flag Link Fri Jan 7, 2011
In my experience if have a system that helps me aquire bank owned homes at a resonable price. The best time to buy a house is when it has been on the market for over 60 days. It also helps if the house needs some repair. Also when I put the offer in I have no contingencies, cash and a closing date in 3 weeks. My 1st offer 66% of their asking price and see what they come back. Usually the bank comes back at 8% lower. Then my 2nd offer is 70% asking price and see what they come back. Then usually the bank comes back at additioinal 5% more down so then they are at 87% asking price after my second offer. My 3rd offer is 75% of the asking price and I say final offer but it really don't mean nothing and usually the bank comes down another 5% more down so then they are at 82%. Then at that pint I come in with an offer of no more than 80% and usually that always work. But in some cases my 75% offer Final works and I even had a offer accepted at 66%. Relators are not a real big fan of this tactic because you may not get the house always. Also when you submit your offer to your realtor advise them to tell the other realtor that you are going to buy a house and you are very interested in other distressed properties and sometimes they informed the bank. Also tell realtor on how much money it will cost to repair home and if the realtor is any good they will inform the other realtor. Bank homes are plentiful and no reason to stress about a paticular property and over pay.
The goverment made the econmy great for buying a bank owned home. I was a replican but now I have to vote democrate in order to keep the home plentiful and cheap.
0 votes Thank Flag Link Wed Oct 19, 2011
You referred to banks, so am assuming you are trying to buy a short sale or foreclosure. When it comes to a foreclosure it comes down to a couple of things. First, what did the bank appraise the home value to be. Usually the banks will start a little higher than that to test the market. 2nd, would be how long the home has been on the market. Like any seller, they want to get rid of the property. Every month the property is on their books is another month they cannot lend that money. Additionally, the asset managers assigned to sell the property are given bonuses on how fast they sell it.

Short Sales.
When it comes to buying a short sale, it all comes down to what the appraisal or broker price opinion came in at, at the time the bank checked property values. This can vary because an appraisal is an estimate. Many short sales fail because an out of area agent performed a broker price opinion and over priced the property. The bank will not accept less than that value minus costs of selling.

Hope that helps.
0 votes Thank Flag Link Sun Jan 9, 2011
Hi Bubbles,

The banks are not always necessarily willing to go down on the list price of a house. In my area, Lake Worth, Florida, many times the newly listed foreclosures are priced aggressively. This results in multiple offers, and usually those properties sell for over the list price. I have had clients offer thousands over the list price and still not get an offer accepted. This doesn't always happen on foreclosures. Sometimes the property sits on the market for a while. Usually, you have a much better chance of having the bank accept an offer less than the list price in this situation. It is a good idea if you get an experienced real estate agent who knows your area to do a Comparative Market Analysis before you make an offer on a bank owned house (I recommend you use a good real estate attorney also). Don't get locked into the idea that there are only great deals on foreclosures. There are many straight sales and short sales that are great deals also. Take a look at all the houses in your price range (that meet your criteria) in the area you want to live.

Keith Korpi
Broker Associate
Coastline Realty, Inc.
Web Reference: http://LakeWorthBroker.com
0 votes Thank Flag Link Sun Jan 9, 2011
Research is going to be your best friend in this situation, If the house has been on the market for awhile, Comps for area , price per square foot if you love the house talk to your agent and put in an offer in this market stranger things have happened.

Good luck,

0 votes Thank Flag Link Sun Jan 9, 2011
Great question, and thanks for asking, Bubbles.
There are, of course, a lot of "it depends" in the answer, because every lender, situation, property, etc. is different. In general, REO and short sale properties seem to be the leading edge on bargain properties right now. If I were in your position, I would do the following:
1. Ask if an appraisal or BPO has been done on behalf of the bank. If so, what was the date it was done? Banks will generally stick with the appraised value for 90 days, after which time a new offer can request a new appraisal.
2. Ask if the bank has an approved price for the property. The list price may have been set by the agent without consulting with the bank, so there may be a built-in cushion.
3. How long has the property been on the market? How many showings? How many offers? Banks want their properties to be "seasoned" a bit before negotiating to far from their approved price.
4. Get a market analysis from your agent to help you understand the valuation, and to use as ammunition when writing your offer.
My ultimate advice? Find out what the property is worth TO YOU, make that offer, and if the bank refuses it, at least you know you tried your best. That way,, when the next property comes along, you won't be pining for the one that got away. Negotiate!
Deborah Bremner
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
(O) 310-571-1364 DIRECT
(D) 818.564.6591
0 votes Thank Flag Link Sun Jan 9, 2011
Hi Bubbles,

Great question!

I am just going to use my own experience to answer. Of course it depends on the specific situation and your agent can best give you advice about what the comparables are in your area.

I do find that most lenders are listings homes aggressively in my area...often below market value. They want a quick offer or two to get the home off the books. If a home has sat for a period of time (different for each lender...some are 2 weeks others a month) and no offers, then they will start to reduce the price on a schedule. I see sometimes that a bank will accept an offer quite a bit lower than they started with....but not at first, just over time.

I normally caution buyers about REO homes in the first few days of a listing. Unless it's the house of their dreams, they might want to wait and see if it sells right away, or over time they might find they get it for a very good price.

0 votes Thank Flag Link Sun Jan 9, 2011
Each home stands alone based on value, condition, comp's and many other factors. In some instances we have recommended out buyers OVER list price submit a sales offer.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Sun Jan 9, 2011
I have found that the longer the house has been on the market, the better chance there is for a negotiable price. The most important thing is that the bank knows about all of the showings and feedback which is provided to them by the listing agent. The bank rarely seems to have a handle on the true condition on the house. Depending on if you are talking about a short sale lien holder or an REO, realize that a mortgage insurance company may be involved too and will have a say in the deal. Good luck in your search for a deal!
0 votes Thank Flag Link Sun Jan 9, 2011
It typically depends, but banks have usually already discounted the property for quick sale and therefore will not negotiate much. Right now on average, bank owned properties on average right now are sold for between 5-10% of the selling price. There are always exceptions though. Your Realtor should be able to give you advise on what things have sold for in the past and the comparables. Banks have their bottom line though and usually stick close to it.
0 votes Thank Flag Link Fri Jan 7, 2011
Here's a bit of free advice. Negotiate the price on the home as aggressively as you can. Your agent should provide you with crecent omparable sales. Ask your agent to prepare a cost per sq-foot comparision. This can help you determine your offer price.

Once under contract and you apply for your loan, your lender will order an appraisal. If the appriasal comes in lower than your negotiated price, the seller has to meet that price or let you out of the deal. Have your agent add this addendum to your contract... "This home must appraised for purchase price or greater, or buyer can cancel this contract and get the binder back."

Last year I got a buyer $10,000 off the purchase price using this approach. Good luck with your purchase.
0 votes Thank Flag Link Fri Jan 7, 2011

There is No standard rule set by the Banks. (sometimes no rhyme or reason!) A Short Sale and an actual Foreclosure are two different animals. Often rendering much different results.

My advice would be to find a Local area R/E expert in your area whom you like and Trust that is interested in Looking at what you would like to Buy (size, location, price, specifics,etc) and getting you Pre-approved to determine exactly what you can afford. (according to your lending company.)

FYI -A Bank will normally require a "Pre-Approval letter" with your offer anyway.

Your Trusted area agent will be able to show you ways to best structure your Offer. This can save you $$$ with or w/o making a Low ball offer. He/She will also Know the area and be able to advise on how to submit your Best & Highest offer on a particular property, especially if there are Multible offers on the table...

Hope this helps
0 votes Thank Flag Link Fri Jan 7, 2011
If a bank is selling a house they foreclosed (known as an REO or foreclosed house) they might come off their listed price by a little. In my area I can look at bank owned homes and I see they sell for about 4% below list to above listed price most of the time. Banks don't counter back and forth like a home owner will, but they will often give you a figure and you accept it or move on.
0 votes Thank Flag Link Fri Jan 7, 2011
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