Property Q&A in Chicago>Question Details

jose, Home Buyer in Chicago, IL

could i make an offer lower than the bid start? what would be a good offer for this forclosure house?

Asked by jose, Chicago, IL Mon Aug 1, 2011

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Hi Jose,

To "bid" would imply an auction sale. If you're looking at auctions then the answer would be "no". All auctioneers have a minimum bid, when applicable meaning instructed by seller/bank, that they will not go below, it's a starting point.

If it's a regular sale, distressed or otherwise, then you can offer anything you want. The main thing to remember is if your offer is too low you may just price yourself right out of the competition/sale. Sellers will sometimes not even consider you a serious enough buyer if you come in with something that is so low it's offensive. Offers should always be backed up with comps.

It's important to know what to offer/bid. All sellers, be it auction, distressed or non-distressed, are looking to get fair market value. That's the bottom line. It's not a matter of "feeling like you got the best deal" it's "knowing" you did. The flip side of course is over paying if you don't know what the fair market value is.

Hire a buyers agent, we're at no charge to you. You get a wealth of expertise & knowledge all working to your advantage. If you're interested I'm available.

Good luck!
0 votes Thank Flag Link Sat Aug 6, 2011
Hi Jose....

My best professional suggestion is for you to hire a good buyer realtor who can assist you. As a buyer, this assistance costs you nothing and you can get the information you need to make a wise purchasing decision based on the right price.

Harold Arnold/Realtor
0 votes Thank Flag Link Tue Aug 2, 2011
hi Jose.. you can make any offer you want and the bank will work with the best one or two or three. Who is helping you with this- The bank is not going to e working with you in most cases with a well organized offer- you do not know how to do that. I can see you at my office and help you if ya need it which it appears you do,
Web Reference:
0 votes Thank Flag Link Tue Aug 2, 2011
Regardless of how the property is offered to market, you need to offer what is a comparable market price in consideration of how much you want the property. REO properties are usually close to or at market value as listed. Not always, but often as banks want them to sell quickly.And in a real auction, yes, the reserve could be higher, but chances are someone will outbid a low ball. On competitively priced homes, low balling only gives someone else the opportunity to jump in and get the property. There are deals out there, but not steals, especially with REO properties. If you are unsure of market value and how to bid, it is really best to work with a professional to ensure you achieve your goal.
0 votes Thank Flag Link Tue Aug 2, 2011
Jose, yes you can, but expect your bid to be rejected almost immediately. In many cases the bid start is a teaser number to simply get folks excited. There may be a unpublished 'reserve' that is the actually price the seller is willing to entertain, not necessarily accept. The reserve can be substantially higher than the bid start.

There are many models for selling bank owned homes through the bid process, some utilize a early priority time window, followed by 'best offer' bidding. In any case, your strategy of low balling a foreclosure is a sure formula for not acquiring real estate. The foreclosure market is very competitive and the low offer and hesitant buyer seldom experience success.
0 votes Thank Flag Link Tue Aug 2, 2011
You can offer whatever you want.

Just know that once a foreclosure hits the market, it typically goes fast. The better your offer, the better your chance of getting it. Best of luck!
Web Reference:
0 votes Thank Flag Link Tue Aug 2, 2011
You need to waite untill it hits the MLS than view the property inside and out,and next would be to have an
real estate agent run comparables from the Multiple listing service for you in order to make a offer that is
going to work for you and with your pre-approval or cash which ever you are going to use to pay for the
property. Debbie Bergthold-Smith Classic Real Estate 708-267-5552
0 votes Thank Flag Link Tue Aug 2, 2011
Of course, but this property has not made it to the MLS yet. It can take a couple of months after the foreclosure for the bank to list it with a Broker. That is why the address is not in this ad. You cannot judge what sort of offer to make until you see the inside to see the # of Br/Bths, condition etc. Then you need to see what comparable houses have been selling for in the area. My web site lets you search for property if you are not ready to work with an agent.
0 votes Thank Flag Link Tue Aug 2, 2011

That is an excellent question and one that we, as agents, are posed almost every day. In the REO space, the easy answer is "yes," but one can not simply pull an arbitrary number out of 'thin air' or wantonly under-bid a property.

I counsel my clients to do more research as part of the bidding process and, in fact, more times than not, we reverse-engineer an offer by backing into a number based upon market research.

This research will consist of (among other things) a proper CMA detailing closed sales activity in the subject property's immediate market area, assessing the amount of work needed to bring the subject back into habitable/finance-able condition and identifying the type of financing to be used for the acquisition.

There are buyers out there whose MO it is to try and rape & pillage on every deal in hopes of capturing every available dollar of upside, but more often than not, those low-ball offers are rejected out of hand by the corporate sellers as insufficient.

Of course, occasionally the screaming deal of a lifetime will surface, where you just close your eyes and buy it at full asking, but those opportunities are few and far between, so a healthy dose of good old fashioned market research with a sprinkling of your broker's knowledge thrown in for good measure is a recipe for success.
0 votes Thank Flag Link Tue Aug 2, 2011
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