There are quite a few variables to consider in answering your question:
1. What are similar properties in the same area selling for? More than likely, as a foreclosure, this property is already listed near or probably well under, market value. Paying "full asking price" for a home, isn't a bad thing, when the property is already 20k undervalued. Banks often list foreclosures for much less than the comparable properties, in an attempt to create a "bidding war" which in turn will increase the selling price.
2. What is the condition of the home? If you walk in, and notice 25k of work that needs to be done to a home listed 10k under market value........I'd probably bid lower.
3. Market time. Banks are generally like clockwork when they price their homes. The first 30 days, they generally won't budge. They'll do a price drop at 60, and sometimes a bigger one at 90. If the property has been on the market over 120 days, they will be more receptive to lower offers with terms that favor the buyer.
Some quick tips -
1. Make sure you have a clear inspection contingency, and a clear attorney review period. Confirm when they begin, and end. Some banks will insert verbiage into the addendum that states the contingency periods begin upon "acknowledgement" (verbal acceptance), or after the contract is executed (signed). It can take awhile to get the signed contract back from these entities, so make sure your agent reads the fine print.
2. Have your agent, and/or attorney read over all the addendum terms - and make sure you understand them. The bank addendums will generally always favor the bank, and they usually include "per diem" (day) charges for every day past the closing date that you don't perform (buy), right to market the home up to the closing date, etc. Their addendum will usually supercede any terms in the standard contract your agent will be using so make SURE you understand the terms before you sign it.
Foreclosures can be a great deal - but make sure your agent does his/her due dilligence when determining the market value for these properties. Remember, banks DO want to dispose of these homes, and are willing to give great deals to qualified buyers. However, negotiation is a two-way street, and contrary to popular belief - they aren't stupid and aren't going to just give them away, regardless of market conditions. Any questions, let me know!
My recommendation for home buyers thinking on making an offer on a home is to have their agent provide comparable sales in the area. Before making an offer on a home, it is helpful to become educated on the the market value. Is the asking price in line with prices of similar homes in the area?
How long has the home been on the market? Banks are less likely to lower the price on new listings. If the home has been for sale for a while, the seller may be more eager to accept a lower offer.
How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. Will you be disappointed if someone out bids you? Great advice for home buyers is to make the best offer you can so you donâ€™t have any regrets.
Prudential California Realty
Have you been pre-approved? I would love to help. We have the best programs/rates available.
Marshall Sparkman 615.439.0885
Understand that the LISTING PRICE has one primary objective, to attract attention: It is not intended to be set in stone, and in many cases it is not even a good guideline toward the SELLING PRICE.
Some Sellers believe that by setting the LISTING PRICE high, they can always come down, and people will make an offer anyway: WRONG! Buyers will just bypass the property and look at houses that are within their price range. And six months from now, the Seller will slowly start lowering the PRICE, (this is called â€œchasing the curveâ€) and Buyers will be asking the question; â€œWhatâ€™s wrong with that house?â€ and â€œWhy has it been on the Market so long?â€
Other Sellers set the LISTING PRICE low, to attract multiple offers. (The correct strategy.) We are asked; â€œArenâ€™t you obligated to sell at this price if someone offers it?â€ The answer is probably not; for that to happen, you would first have to have only one offer, and secondly, the offer would have be exactly the same, down to the smallest detail, (please discuss this with your Realtor).
Another thought; Buyer will search for potential properties by groups; for example, $400,000 to $450,000, and $250,000 to $300,000. If your house is priced at $460,000 or $310,000, the Buyers will never see it. (something else to discuss with your Agent.)
Different Banks have different philosophies about pricing their properties: You cannot draw any conclusions without a good analysis.
Have your Realtor do a CMA, (Comparative Market Analysis) to help you determine your Offering Price. It is the surest way to determine the Market Value of the property.
If the home is in good shape, we often see multiple offers and sometimes the property can go for over list.
Hope this helped you and please don't hesitate to contact me if you have more questions,
In some areas, they get more than asking price; in other areas less. Where I am, it is less. I have bought places for 1/3 of the price they started with and others for nearly as much as the asking price. Drive to another part of the US and the concern might be how much over the asking price do I have to bid.