Scubacjr, Home Buyer in Port Charlotte, FL

how to put in an offer on bank owned homes?

Asked by Scubacjr, Port Charlotte, FL Wed Jan 20, 2010

House is bank owned. It was for sale for $114,000 before the bank owned it and now the bank is asking $119,000. Is there a percentage of a reduction that is ok to use when attempting to come up with a beginning offer?

Help the community by answering this question:


The bank generally sets the price based on an appraisal - that could by why it went up once they listed it as bank owned. However, if it didn't sell at teh $114,000 it may not have been a wise move on the banks part to raise the listing price. However, it is what it is. The offer you place has to be one that you are comfortable paying. If you currently have a realtor, they can run a "mini-CMA" for you that tells you what comparable homes have been selling for in that area for the last 90 days - you can base your decision on what to offer on that information if you are comfortable with it. Always be aware that the home will have to appraise if you are obtaining financing so you should be aware of what they are selling for currently. Your realtor can also find out from listing agent if there are any other offers and what the banks procedure is for multiple offers - if they have one - some do and some don't. Multiple offer situations can drive the price on the home beyond the asking price - so your offer should be dependent on how much you want to the house and - there is some value in it being the perfect house for you - if that is the case in this situation. YOu also should be made aware from your realtor and/or listing agent if there any fees that the bank requires the buyer to pay, i.e,, doc stamps, title, etc.) Would be happy to help you if you need assistance.
Web Reference:
1 vote Thank Flag Link Wed Jan 20, 2010
We list many of the bank owned homes in the area so we have a pretty good handle on what to expect. A home that is in foreclosure is a home that the bank has taken over completely. The homeowner is not the homeowner anymore and therefore does not have an interest in the property at all. The price that the home is listed at is approved by the bank and therefore will sell at or near that price. In some cases, the bank MIGHT accept slightly less than the list price but more frequently, the property will actually sell for a slightly higher price due to multiple offers being submitted. The banks will always take the highest and best offer that is submitted rather than the first offer that is submitted. Foreclosures, or bank owned properties often are on a price reduction schedule that will reduce the price little by little until a strong offer comes in on it. The amount of time that you will wait is negligible; usually about the same amount of time that it would take if you were submitting an offer on an owner occupied home. In most cases, banks will want to close within 30 days so they can turn their inventory as quickly as possible.

People often ask me how the banks arrive at the price that they list it at. I get questions like, "how does the bank even know what the property is worth if they're out in California? They don't know our market." "Do they even know that there are holes in the walls or the carpet is stained?" The answer is yes, yes and yes. The bank gets a full report on each property and pictures. We do what is called a BPO or Broker's Price Opinion.

Here's the formula that they follow: If the home is in an urban area you can search for comparable homes within a one mile radius of the subject property, if the area is suburban you can go out 5 miles and rural you can go out 10 miles. The closer the comp the better. Next they will let me go back in time 6 months in sales from today's date. Some banks are only allowing me to go back 3 months or less because the market is changing so rapidly. For comps in the final report, the banks will only look at three active property comparisons and three sold comparisons. They do not look at any pending properties. Then we look at square footage of the home. We take the living square footage under A/C and multiply by 20%. We take 20% off the square footage and add 20% to the square footage to get a bracketed size. For instance if the living square footage of a home is 1500 sq ft. I would add 300 sq ft and subtract 300 sq ft. So, the home that I would look for would be between 1200-1800 sq ft. Then next thing is age. They like the homes within five years +/- on the age. So, if the home was built in 1995, I would search for homes built from 1990-2000. In some cases they will let us go 10 years on either side. They also prefer us to stay with the same number of bedrooms and bathrooms. If the home has a pool, they would want us to use other homes with pools for comparison or put in adjustment for a pool.

I also want to point out that they will get a BPO from the list agent and then the banks also pay for at least one Realtor that is independent of the sale to do a BPO. Then they compare the two. If the prices that were arrived at are wildly different then they would question both Realtor's about their BPO's. Both Realtors are required to submit photos of the home so the bank can view them. They typically want photos of any damage, all mechanicals and appliances, the water heater, electrical panel, four photos of every room, the pool area (if there is one), and a street view of both directions. We also fill out a page of positive and negative features of the property. And at the end of the report we will give our opinion on a list price for the home to get it sold in 30 days. So, there you have it that's how we arrive at a price for the bank.

Here are a few points to keep in mind. Usually foreclosures do close pretty quickly. If you are submitting a cash offer they will want to close in 14 days. If it's financing, usually 30-45 days is acceptable.

Most of the time banks will pay for title and they will select the title company. This is because they want to keep tabs on all of the property they handle and it is much easier to do this if they are all at one title company.

If there are several offers on a home the bank will often come back and ask each buyer for their highest & best offer. Sometimes they will require you to sign a form notifying you that you are in a multiple offer situation. This is not always set in stone and they don't have to do highest & best. Another question I get is," Can you disclose any of the offers?". The answer is no. The other buyers will not know what you offered and you will not know what another buyer has offered. Your Realtor can run comps for you to determine what a reasonable offer might be.

The Moore Team
Shannon Moore, Broker-Associate, 941-276-8142
Re/Max Anchor Realty
0 votes Thank Flag Link Wed Jan 20, 2010
The system would only let me type so much so this is the other half to my answer :)

Many people don't realize that it's not just the price that banks consider. There are several things that you can do to make your offer more attractive to the banks. We list a lot of foreclosed property so we are pretty familiar with the procedure.

Here's one tip: For the closing date make it 7-10 days before the end of the month. The banks want their property closed out and off the books before the end of the month. If the offer is written 7-10 days before the end of the month it gives time for any issues that might arise to get resolved and the property to close before month's end. An offer written this way would generally be more attractive to a bank. If two offers are close in price the bank would likely choose the offer written like this. There's several other things but that's one of the big one's.

The asset managers are very busy in the last two weeks of the month closing out that months inventory. Typically the response time will be longer if you are submitting an offer at the end of the month. Many of the new foreclosures come on in the first two weeks of the month after the asset managers have closed their properties for the previous month.

All foreclosures are sold "as is". An "as is" contract reads, "as is" with right to inspect and you will fill out how many days you have to inspect the home and cancel the contract if you find any issues. The banks always sell their property "as is" because they have never lived in the property and therefore are not aware of any issues there might be with the home. You will also not receive a sellers' disclosure, which is a typical document in a owner occupied home. This again, is because the bank has not lived in the home. There may or may not be issues with the home but I always advise my buyers to hire a home inspector to check the home over, even if it's brand new.

Once you submit your contract and it it accepted, the bank will almost certainly send another contract out that overrides the first contract. Please read this contract carefully because most of the verbiage will be different than the original contract you signed and this contract and addendum's will override anything in the original contract. Some banks will not allow a cancellation of contract if you find something wrong with the home. It would state this in their contract. Often the addendum are 5-30 pages long. Many of the longer contracts are with Fannie Mae, Freddie Mac and HUD. HUD usually will not let investors bid on their homes until the home has been on the market for 10 days. This gives an owner occupant a chance to offer on the home without the competition of an investor. So, many of the HUD homes sell to owner occupants for this reason.

Hope this helps clarify some of the questions and mystery behind the short sale and foreclosure process

The Moore Team
Shannon Moore, Broker-Associate, 941-276-8142
Roxanne Moore, Realtor®, 941-626-3926
Tammy Archibald, Realtor®, 941-564-8605
Fax, 941-870-9233
Re/Max Anchor Realty
14806 Tamiami Tr, North Port, FL 34286
0 votes Thank Flag Link Wed Jan 20, 2010
There really is no "rule of thumb" when it comes to making an offer. Many lenders and/or banks ask an artificially deflated "low" price to stir-up the market and start getting offers. The offer that the lender will accept is usually "highest and/or best". I've seen most bank owned properties sell for far more than asking price.

Have an area expect put together a recent CMA for that property- you may see that the asking price is on target or too high or low.From the information provided- it looks priced realistically.
0 votes Thank Flag Link Wed Jan 20, 2010

You should also consider how you will be financing the purchase. Cash offers always make a number look more attractive. Therefore, you can infer that a slightly lower price with cash vs. a higher price with a loan might make a bank look more favorably on your offer. Conversely, you may want to offer a bit more with a loan.

Any questions, please do not hesitate to contact me.

Leslie J. Poole, SFR
Century 21 Aztec & Associates
4456 Tamiami Trail
Charlotte Harbor, FL 33980

Cell: 941-286-4789
Fax: 941-625-5244
0 votes Thank Flag Link Wed Jan 20, 2010

First, to make an offer on a bank owned foreclosure, you must show that you have adequate funds or are preapproved by a lending institution to purchase at the offer price. A letter from a financial institution will do.

When a bank sets a price they have completed an appraisal that shows current sales of similar homes. Most banks expect to NET 75% or more of the listing price. If there is little competition for the home, you can use that number as a benchmark to making the offer. That does not mean an offer of $75,000 on a $100,000 listing because the bank will have costs involved. There will be title insurance, taxes, and other costs. In addition, some banks will counter offer (negotiate) and some will say yes / no to an offer and await a second offer. That is where a real esate broker can be of great assistance. A broker will be able to help you assess the market and the costs involved and determine a good offer price.

You can use our website to conduct your own evauation of similar properties:

This will allow you to select an area and find similar homes to your subject property.

I hope this information helps. Let me know if I can be of further assistance.


James Mulligan
Licensed Real Estate Broker
Suncoasteam Realty
PO Box 380503
Murdock, FL 33938
941-456-3034 voice
941-585-0505 fax
Web Reference:
0 votes Thank Flag Link Wed Jan 20, 2010

It's difficult to say why the price increased. It may be because the original price was an unapproved short sale price.

As a buyer of a bank owned property often the biggest mistake buyers make is to attempt to negotiate the price down. This tactic can work but only when there is no competition. If this home is new to the market and desirable you should consider offering an amount close to their asking price or it will go to someone else.

Good luck
The Eckler Team
0 votes Thank Flag Link Wed Jan 20, 2010
Banks certainly don't want to take a loss. They want to get the highest bidder. To put in a bid, you must know what other similar properties in the area are selling for. Depending on the condition of the property, you'll have to decide on an offer. Every property is so different and your starting offer will depend on the property and how badly you want it. Also LOCATION! LOCATION! LOCATION!
A Realtor would be an asset in this. As a buyer, you would get a free service, since it is the seller who pays the commission. If you would like my help feel free to call or email me. Or work with a Realtor you can trust. They will be able to get you a lot more information that you have access to.


Genevieve Ramachandran
Punta Gorda Realty
0 votes Thank Flag Link Wed Jan 20, 2010

There is no percentage of reduction to use when coming up with your offer. The number that matters is what the home is actually worth. We can help you come up with that number by doing comparisons in the area of the home to see what homes have been selling for within the last six months or so.

If you would like assistance with coming up with your offer price, please contact me at 941-875-9651 or email me and I would be more than happy to assist.

Good luck with your home purchase!


MJ Shetron
Suncoasteam Realty
941-875-9651 Office
941-268-1938 Cell
0 votes Thank Flag Link Wed Jan 20, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer