Home Buying in Tucson>Question Details

Mark, Home Buyer in Tucson, AZ

I know that there are a lot of factors that come in to play, but I would appreciate an approximate answer .

Asked by Mark, Tucson, AZ Sun Jun 22, 2008

If the bank is offering a house for $850,000 , in your opinion what is the lowest , realistic offer that I can give the bank ? Two weeks ago I purchased a house that was owned by a bank, they dropped there price from $695,000 to $625,000, but after the sale I was told by a friend that I could have probably bought it for much less. Any light that you can shed on this issue will be greatly appreciated.

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There is no way to be certain but, one can attempt to estimate. If you would like to work with me, we could see what can be done. Bank adjasts asking price to maximum of what they believe they can get.
No one can give you a reliable answer without studying your situation and detail. Agents makes a living by working on cases lik this - so, it is most unlikely that any one will give you the 'secrets' for free.
George Tucson Home Advisor LLC - Realtors
GeoSzk@WBhsi.net 682-8874
1 vote Thank Flag Link Sun Jun 22, 2008
Sounds like you made a great purchase, if the information give to you was correct. I do not service Tucson, but I will be more than happy to get you in contact with a local agent that work in Tucson

Tonje Kearney
Arizona Premier Realty Homes & Land
1 vote Thank Flag Link Sun Jun 22, 2008
There are many factors to consider, as we all agree, but the one factor I think that has not yet been addressed is that real estate is a commodity. The price is based not on an arbitrary number the seller (in this case, the bank/lender) sticks on it, but rather, the fair market value of the home based on current market conditions. If I go into a department store, and a pair of shoes is priced at $100, I can either buy the shoes or walk away. A home's value rises and falls based on economic factors (supply and demand).

Did you have an appraisal done? Was the home's value higher or lower than the original asking price of the home? What is the home's market value today? Did you use a Realtor to assist you or did you go buy the home without representation? If you did use a Realtor, did they run market statistics on the community to assist you in determining the home's value, and an appropriate offer?

Regardless, it sounds like you've bought a beautiful home! Enjoy it and savor the fact that you did apparently get a very good deal!

Best of luck,

Suzanne Rothman Yafet, Associate Broker
Coldwell Banker Residential Brokerage
1 vote Thank Flag Link Sun Jun 22, 2008
I do work actively in Arizona, and from my experience if the home was priced at current market you got a smoking deal and got real lucky. Banks usually get 2 independent appraisals and price the home at the appraised value. Unless the home has been on the market for a very long time, I find that the banks very rarely budge on their price by a whole lot. I do see around 5% off asking quite often, but very rarely more than that. That said, there are as you are aware of many factors to consider when offering on a bank owned home such as:

Time on market
Length of time home has been in the hands of the bank
Original loan amount
List price vs. market price

There are definately deals to be found and if you have patience you will find that one bank that is ready to let go of a house, but in general banks deal wityh numbers and numbers only and if they don't make sense to them they will not accept your offer. I do see time and time again though, that they reject an offer only to reduce the property to below the original offer a few weeks later, which makes no sense. But it is what it is and not much to do about it. Banks have no commons sense :)
1 vote Thank Flag Link Sun Jun 22, 2008
What really does your friend know? Do they work for the bank?
You already negotiated a 10% reduction in price. Did you feel that you got a great deal before your friend open their mouth.
What I know about bank owned homes in the high 600`S, getting 10% off you did as well as you could.

When your friend brings over a house warming gift, look at them and say " Thanks...is this the best you could do? "

Enjoy your new home.
1 vote Thank Flag Link Sun Jun 22, 2008
Mr.P, Other/Just Looking in Arizona
Obviously I'm not in Arizona, so that will probably be mentioned,. but no matter where you are, there is no set amount a bank, or homeowner for that matter, will go down from their asking price. It all depends on what similar homes have sold for. Friends are not always helpful when they instill doubt after the fact. I would wonder how good a friend that is. Assuming the house was priced competitively, I would say the discount you got was pretty darn good. What did your appraisal come in at?
1 vote Thank Flag Link Sun Jun 22, 2008
Hi Mark, I think an important question to consider is what you are planning on doing with this second property. I assume that it won't be as a primary residence since you recently purchased a home. This will affect your financing options and is something to consider. Also, if you were renting, will your rent cover a good part of your mortgage? I also would say that if you were thinking of "flipping" the home, consider why someone else didn't buy it at a higher price before you did. It is possible to do it but extremely, extremely difficult in this market.
Would you like a comparison market report for the house and the surrounding neighborhood? It sounds like you were given some of this information but you don't sound confident or convinced that it is accurate? And while we all appreciate the service that Trulia and Zillow provides, their valuations really have to be re-evaluated by a licensed professional working in the area. A market report usually takes me about a 1/2 hour to run and it's essentially a second opinion. I'm happy to do it for you and at worse, it will give you some extra information about what to do next.

0 votes Thank Flag Link Sun Jun 22, 2008
You really need to be working with a realtor. The price depends on so many things... where the house is, & what comparables are, the condition of the home, among other things. Keep in mind, it is a buyers market, & deals are out there... a reator will help you make the best deals. Call me, & I will be happy to assist you in any way I can.

Heidi Guyton
Realty Executives
0 votes Thank Flag Link Sun Jun 22, 2008

Feel free to email or call to discuss this further, I would be glad to help.

Ronnie Spece
Realty Executives Southern Arizona
Web Reference: http://www.tucsonron.com
0 votes Thank Flag Link Sun Jun 22, 2008
Thank you all for your answers and advice. I surely do feel better about my previous purchase after reading your professional opionions. To answer some of the questions, the house was on the market for 3 month, according to the information that I was given, the lowest price for a house sold in the same community was 1.1 million and it was smaller. In regards to the $850,000 house, that was the market asking price a month ago, its scheduled to be auctioned in August, but the current owner tells me that I can own it for $640,000, but he didnt confirm anything as he needs to talk with the bank people. Would any of you guys be interested to help me out with this one ? I'm new to this, and this will be only my second investment purchase in real estate.

Thank you
0 votes Thank Flag Link Sun Jun 22, 2008

By our team's experience with Bank Owned properties; we have noticed that Banks have listed their properties "Aggressive", but also "Competitive" as well. Meaning they have done the proper research to determine not only the value but to gauge the actual activity that the market is bearing in a given area.

When they orignally list a property normally they look to receive and or except offers of at least 90% of their asking price.

If they do not receive the desired activity within their forecasted time period (normally 5wks), they will re-evalute their numbers based on poor activity and then apply the 90% principle again.

So, if you paid $625k for a property that was originally at $695k, your offer fit into their intial market assessment. And, I would have to agree with your friend that you could of indeed purchased the property at a lower price.


0 votes Thank Flag Link Sun Jun 22, 2008
I would agree, as you said, there are many factors to consider. Too many, in fact, to give a good general (or approximate) answer to this question, but I will give it a shot:

"Generally" speaking, if they had the home priced at $695,000, the price was likely very close to a fair market price.

Bank owned (aka REO) properties generally have 2 or more opinions on price submitted by real estate agents and/or appraisers. Those are then reviewed by the bank or a third-party handling the REO for the bank; then the price is set.

If you purchased a $695,000 home (assuming that was a fair market price) for 10% less, it sounds like a solid deal, "generally" speaking. It is of course possible that you could have bought it for less, but I wouldn't dwell on the "what-ifs" if the deal is done. In the enlightened words of a former economic professor of mine - "Don't cry over spilled milk".

As for the $850,000 home, you could use the same 10% figure and offer $765,000. Or perhaps push it to $750,000. I cannot stress enough that there are far too many unknowns to rely on my answers here for your individual situation. Some people may start at 20% below list price, or may not consider it in percentages at all.

Best of luck and enjoy your new home!

Ronnie Spece
Realty Executives Southern Arizona
Web Reference: http://www.tucsonron.com
0 votes Thank Flag Link Sun Jun 22, 2008
The only one who can answer your question with any degree of accuracy is the representative of the bank that owns the house and s/he is not going to give you an answer.
0 votes Thank Flag Link Sun Jun 22, 2008
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