Foreclosure in San Diego>Question Details

G.H.J., Home Buyer in San Diego, CA

How high to offer above a foreclosure listing price?

Asked by G.H.J., San Diego, CA Sat Dec 13, 2008

I am currently looking at a home that is foreclosed and is being offered at $235,000. It is 3 bed, 1 bath, garage, nice yard, 7 blocks from the beach in Imperial Beach. It is listed at 950 square feet. I know that in order to obtain a foreclosed home with a low listing price you normally have to put an offer in that is higher. For this situation, how much higher would I need to offer in order to have an excellent chance at obtaining this home? I just started looking in IB and am not sure what the market is like there. Thanks!!!

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11
Good question, G.H.J!

So many foreclosure and short sales in San Diego are coming to resemble e-Bay transactions. It is so frustrating for a buyer to submit a bid, only to find out there are 12 other bids on the table. Here are some of the things we do to increase our chances for successful bidding:

1. Prior to submitting an offer, we speak with the listing agent to "seek guidance" in our offer--especially when we are in a competitive situation. It doesn't always work, but armed with that information, we stand a much greater chance of winning the bid.

2. Be thoroughly pre-qualified with a direct lender and have that letter on hand to submit with your offer.

3. Offer a fast closing date with no contingencies. Lenders like speed--at least on your part.

4. Present a strong earnest money deposit--at least $5,000. on an offer of this size ($235,000) shows strong intent.

5. Finally, and most importantly, do not get emotionally involved with the transaction until you know your offer is accepted.

Another thing we do as buyer's agents--and when there are no other offers on the table--is ask the listing agent to place the property as "pending" if we submit a reasonable offer. It's a long shot that occasionally works--and helps insure a successful transaction. No buyer feels secure with the prospect of overbids overshadowing the offer.

Additionally, we are finding that many San Diego area home sellers are coming to grips with our market and are pricing their homes competitively–sometimes at prices that beat short sales and foreclosures.
1 vote Thank Flag Link Thu Mar 12, 2009
Roberta Murp…, Real Estate Pro in San Diego, CA
MVP'08
Contact
All you can really do is to get reference points from your buyer's agent (hopefully you are working with a buyers agent) and make a fair offer based on what similar homes have been selling for. I think there is a common misconception that "foreclosure" means "pennies on the dollar,everything must go" when in fact it does not. If you make a fair offer, you should have a good shot at landing the home. If you don't get it, then feel good that you didnt have to over pay for the home and move forward
0 votes Thank Flag Link Thu Mar 12, 2009
G.H.J.

You need to be working with an experienced agent for one. My advice when buying a foreclosure is don’t get attached. There are many foreclosures in IB and many more coming. I showed 2 new ones that came on the market yesterday. You want to be first in with your offer and have an offer that covers what the REO listing agent and asset manager are asking for. Your agent needs to know the market and find out if the foreclosure is overpriced or under priced or priced correctly. That will be a major factor in what to write the offer at. Be patient in the IB market there are some great deals coming and by all means hire a competent real estate agent.

Foreclosure Search Tools http://www.dawnsellssandiego.com/SanDiegoForeclosures.amsp

Dawn Lewis
http://www.dawnsellssandiego.com/
0 votes Thank Flag Link Wed Jan 21, 2009
GHJ,

Our recommendation is to use the recently sold home prices for your target locations as your gauge for offering prices. Being as informed as possible about the current market trends will serve you well.
0 votes Thank Flag Link Wed Jan 21, 2009
G.H.J.

You need to be working with an experienced agent for one. My advice when buying a foreclosure is don’t get attached. There are many foreclosures in IB and many more coming. I showed 2 new ones that came on the market yesterday. You want to be first in with your offer and have an offer that covers what the REO listing agent and asset manager are asking for. Your agent needs to know the market and find out if the foreclosure is overpriced or under priced or priced correctly. That will be a major factor in what to write the offer at. Be patient in the IB market there are some great deals coming and by all means hire a competent real estate agent.

Dawn Lewis
http://www.dawnsellssandiego.com/
0 votes Thank Flag Link Wed Jan 21, 2009
My advice, find out the following information:
1. Is it multiple offers?
2. How long has is been on the market?
3. What is the condition and is it going to meet the guidelines of your loan if your getting an FHA or VA Loan?
4. Are you asking for closing costs, termite repairs and home warranty?
If you hands down want this house and are willing to pay listing price and take it in as-is condition, as long as no one else offers that, the bank should jump on it. However, you may have more room for negotiations than you realize and you and your realtor should do some research and you might find you can get the property for less in addition to the seller paying for items like closing costs and termite work.

Cassandra
0 votes Thank Flag Link Mon Jan 19, 2009
Hello IM a REALTOR and Loan OFFICER here in SAN DIEGO. Your REALTOR if you have one can get you a market report from their TITLE COMPANY. You can learn about sales in the area. As far as your question. IF You want the house I recomend making your highest and best offer. IF there are no other offers on the house, your agent can find this out for you, then go in the lower range. Every situation is different, this is something you should direct to your agent because he or she is in comunication with the SELLERs agent. If its a bank owned property and your being represented by the sellers agent, Id recomend if its not to late to get your own agent. You can also look up property values yourself on various websites to give you an idea of values http://www.SanDiegoRealtyUpdate.com and of course ID be happy to help you if you like :) good luck
0 votes Thank Flag Link Sat Dec 20, 2008
Hello G.H.J. Price is not everything. While banks look at the bottom line, they also take other terms into consideration. Banks like clean offers (i.e., no contingencies and fast closing). Whether you have to offer above asking and how much will really depend on whether there are any other offers. Ask your agent to find out if there are any other offers on the table. Some listing agents will reveal quite a bit of detail about other offers and others don't. It does not hurt to ask. The answers can vary anywhere from giving you the highest offering price to "we are not giving any information." Some agents even think it's illegal to reveal the terms of competing offers. While that's a common myth, there's nothing illegal about it unless there's a written confidentiality agreement (which typically does not exist). Sorry about the little excursion on this subject.

If you are competing with an all cash offer, you may have to come up in price quite a bit if you are making an offer that's contingent upon a loan. Banks prefer all cash offers because there is no loan and appraisal contingency. The problem with a high offer that's contingent on a loan is that it may not appraise at the purchase price. They'd rather sell to an all cash buyer for less money and not have to deal with loan and appraisal contingencies. The bottom line is, get as much info about other offers as possible and write up your offer accordingly.

Good luck to you.
0 votes Thank Flag Link Sat Dec 13, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
There is no rule saying you HAVE to offer higher than list, especially in this economy. Some agents will tell you anything to get the price (and their commission) up. There are many excellent agents out there that do a terrific job, but this industry certainly has its share of people looking out for their own financial interests. Keep your eyes open during every phase of your deal, and read up on what is considered "normal" rather than blindly accepting everything your agent tells you. There is a lot of valuable data here on Trulia that, when combined with answers from your agent, will give you a good idea of what offer might be needed to be taken seriously.

- What is the CURRENT median SALES price in the zip you are looking to buy in? I would ignore median list price (way inflated) and median sales price data older than 6 months (outdated).

- How does median sales price compare to their asking price?

- What is the trend in that zip - are prices way down, only slightly down, or perhaps even moving up?

- How long has the unit been in foreclosure? Was it a failed short-sale?

- How many similarly sized/appointed units are on the market?

- Probably the most important question, how many offers do they currently have on the property?

Your agent should be able to answer all of these questions for you, but you would be wise to take a "trust but verify" attitude on any data from any source, including Trulia, just to ensure it is accurate and up to date.

Think of the answers to the above questions as a power balance, or negotiation balance. If their asking price is well below median SALES price for your zip, it's a point in their favor. If it's been in foreclosure for a long time, point to you. If the market in that zip is moving downward quickly, point to you. If there are a lot of similar units on the market (especially if they have been on the market a long time) point to you. And most importantly of all, if there are no current offers on the property, double bonus points to you.

Either way, an offer at asking price or even below will be taken seriously unless they have other offers that are higher than yours. They will just counter-offer, which they will probably do no matter how good the offer. If your agent tries to tell you that they can't reveal the number or value of other offers, don't believe it. They probably just want you to panic and overshoot your offer, making the sale more likely and making them a tasty commission.
0 votes Thank Flag Link Sat Dec 13, 2008
1. Your first step is for you and your Realtor to research the value of the home with recent Sales Comps and Market Activity. If you find then that the property is under valued in the listing price you can determine a ballpark figure of what the actual value should be.
2. The next step is for your Realtor to call the listing agent and find out the activity is on the home, Do they have Offers? If they will tell you, ask How Many Offers? etc. This conversation can help you determine what you should offer as well and how to make your offer stronger if necessary.
3. After reviewing the Value and Activity, it becomes a decision on what is affordable for you on an offer price. Stay in a value range that is comfortable and affordable for you. Remember, the home does need to appraise!

Bank Owned homes have received as many as 30 offers and as high as (from my experience) $50k over list price. It is very competitive depending on the home. Good Luck!
Web Reference: http://www.beachbunch.com
0 votes Thank Flag Link Sat Dec 13, 2008
GHJ,

Do yourself and favor and dont try to "time" the market or guess on what you think it might take. It will take an aggresive agent to make the calls and drill the other side and probe probe probe.. to get the answers you want before we make the offer.

Let me know if I can be of assistance.. david@renter2buyer.net
Web Reference: http://www.renter2buyer.net
0 votes Thank Flag Link Sat Dec 13, 2008
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