Foreclosure in Michigan>Question Details

Jason Mulhei…, Both Buyer and Seller in 48084

I'm going to make some offers this week on REO's. The homes I'm looking at all have ARV of around

Asked by Jason Mulheisen, 48084 Mon Aug 4, 2008

$100,000-110,000. The homes are in SE Oakland county, are vacant, and have been so for over 120 days. Are $50,000-$60,000 CASH offers realistic in this instance? I know, it depends on the shape of the house and how many repairs, but just looking at some general feedback from REO brokers or investers.

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0 votes Thank Flag Link Thu Aug 14, 2008
I'm an investor, and I think some of the previous answers may have missed a critical point in your question. You noted that the homes have an ARV of around $100,000-$110,000. As you know, ARV means "after repair value," not necessarily the price the home's listed for. In fact, if an accurate BPO was done and the homes needed repairs, the BPO might have come in at $90,000, $80,000, or even less. (A bit of mold and water damage goes a long way to lowering the present value of a house.)

So, much of the answer to your question isn't with what the ARV is, but with what the list price is. And a good local Realtor who specializes in foreclosures will know the policies and practices of the lender: How often it drops the price and by how much, and how much under list the lender will accept.

Taking my example from above, if the BPO came in at $80,000 and the lender drops the price by $5,000 every 45 days, after 90 days it might end up priced around $70,000. Then, many lenders have a range they'll consider; for some it's in the ballpark of 85% of the current list price. Well, 85% of $70,000 is $59,500.

So, it may be possible to find a property with an ARV of $100,000 and make an offer of around $60,000. It'll take some patience and a good Realtor who knows both what the lender is likely to do and who can tell you what the ARV on the property is likely to be.

Hope that helps.
0 votes Thank Flag Link Thu Aug 14, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
I am still in redemption but got an offer on my house for $150,000. My loan and equity together is $310,000 and the bank bought it back at sheriff sale for $220.000. From reading your posts I lost hope on this offer. Won't they even counter? I have my house listed now for $200,000 which is a steal and this is the only offer I have gotten.
0 votes Thank Flag Link Thu Aug 14, 2008
I agree. I haven't seen a bank take less than 85% of list in Livingston county. More often its closer to 98%. Cash has little effect on price, other than to close a little faster. Remember, these banks don't pull a list price out of thin air.They have done at last 3 BPO's and sometimes an appraisal as well. If they price it at about 50% or less of what was owed on the note, that's pretty aggresive from the start. To offer them 50% of that figure will get it tossed right back at you.
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0 votes Thank Flag Link Mon Aug 4, 2008
Depends on the house and the bank. I am not seeing many go at 50% of value in SE Oakland County though. Most of the banks I work with would reject that offer, even if it was cash.
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0 votes Thank Flag Link Mon Aug 4, 2008
Maureen Fran…, Real Estate Pro in Birmingham, MI
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