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.
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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.
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!
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.
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.
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.
Coastline Realty, Inc.
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.
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!
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
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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.
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
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.
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