Home Buying in Phoenix>Question Details

Greg, Home Seller in Normal, IL

What is the typical range under list someone would submit an offer in the Phoenix market on foreclosures?

Asked by Greg, Normal, IL Thu Oct 23, 2008

I am looking to move to northern Phoenix next summer and with the number of foreclosures, would like to take advantage of the opportunity. Is there a general rule? 10% 20% under the list price?

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Hi Greg,

There is no general rule for submitting an offer. To make an informed decision, you will want to work with a Buyer's Agent who will research the area finding recent sales as well as other properties for sale to help you determine your offer price. What if the listed price is already 20-30% below other recent sales? It's possible & happens all the time. So, you can't submit an offer based only on the listed price. You'll want to do research.
A lot of properties are priced aggressively and get multiple offers on them which increases the final price. So, if you were to submit an offer below the listed price on one of these properties, you would not be able to buy it. However, if the property has been on the market more than 30 days as a lender owned property, then I would submit an offer 10% below market value. I just did this for one of my buyers. Recent sales showed the property should be selling for $125K-$135K but the REO bank recently reduced it from $135K-$99K & received 5 offers on it. But we got our offer acceped at $90K with the REO bank paying $5400 of my buyer's closing costs.
So, while there is no general rule when submitting offers, you must use good information & logical reasoning. Offers are not only about price, but about terms & conditions. If you offer full price but want 90 days to close, that may not be as desirable as a 5% discount but close in 30 days. So, it depends on many factors, including whether your purchase is contingent upon financing or if it's a cash offer.
So, hire a good Buyer's Agent, do the necessary research & make informed offers.

---
PAUL WELDEN
Buyer's Agent REALTOR
HomeSmart Real Estate
0 votes Thank Flag Link Thu Oct 23, 2008
There are many factors to consider and each bank has a different formula. I sell bank owned homes with several different financial institutions and they all have their "way" of doing things. When deciding on what to offer, first question is to make sure that there are currently no offers on the home. If there are offers, working with an experienced REO agent is very helpful in determining the best course of action to take. Some other factors ito consider: How long has the home been listed? Has it been listed before with another agent? What are foreclosures selling for in the area? Is the market foreclosure driven? Are repairs needed? Typically the good foreclosures go fast when they are priced well and you may get into a bidding war if it's a nice property.

In some cases banks WILL make repairs to qualify the home for financing. I've been successful in encouraging banks to repair items ranging from roofs to a/c units. As for a rule of thumb, I wouldn't quote you percentages but when days on market increase, typically the banks negotiating room increases as well. Properties that are on the market for 90+ days are usually going to sell for a higher percentage under list than a new to market property. But remember to ask yourself-why HASN'T the property sold...
Web Reference: http://www.DanMullarkey.com
0 votes Thank Flag Link Tue Nov 11, 2008
There are bidders who start 50% below list price and bidders who start above list price. The further below list price you bid the more likely you are to fail to actually buy the home. The closer to list price, particularly as you go higher than list price, the more likely you are to actually buy the home.

Many foreclosure listing agents are purposefully creating auction-like environments with fictitiously low listing prices, and keeping the listing open until the bank feels the maximum offer has been achieved, which can be 10-25% higher than the original list price. I'm not kidding.

In the end, the listing price is and always has been a suggestion. The value of a property has never been established by the list price, but by the amount a buyer is willing to pay. For that reason, I would advise you NOT to focus on listing prices, but on selling prices for homes comparable to what you want to live in.
0 votes Thank Flag Link Fri Oct 24, 2008
Hi Greg,

Short answer, there is no general rule for pricing of foreclosed homes right now. As everyone else stated, you really need to comp out each listing on it's own to see what the real value of the house is.

I would be happy to help if you need assistance with comps. Just drop me a note!

Todd Lee
tlee@tleerealty.com
Web Reference: http://www.TLeeRealty.com
0 votes Thank Flag Link Thu Oct 23, 2008
Greg,

It depends on the home and area, however once there is an offer on the home the bank will determine what the home will sell for.
If it is an optimum property there may be several offers! You will determine what your offer will be when your agent will check recent solds.
If there are no offers you may consider a lower offer. If it is too low it may not be submitted, keep in mind sellers will have to accept it and then send it to the bank even though the bank has the final say. It can take the bank several months before they accept an offer! Hopefully it will change by the time you move here.

If its lender owned it will be much faster!

I hope it helps feel free to contact me!

Lucinda Tkach
Windermere Central
602-799-6846
0 votes Thank Flag Link Thu Oct 23, 2008
It depends on the house and many factors: how much the original loan was for, how long it's been on the market, and how much the bank originally listed the house for.

If the the house has been on the market (as listed by the bank) for a long period and their asking price is close to the original mortgage, you may be able to get it for under the list price. However, if the house has only been on the market for a short period and the bank is already asking a very low price, you may have to offer quite a bit over the listing price.

Please contact me if you have any specific areas in mind and I can start looking for you!
Web Reference: http://www.susanbodnar.com
0 votes Thank Flag Link Thu Oct 23, 2008
Greg,

That would depend on Where you want to buy in Phoenix.

I don't think you'll have a problem finding a home here in the area (I live in North Scottsdale) but you may have to re-think your purchase area depending on what you intended to spend.

There is so much help I can provide you but I would need to know a little more about the specifics of what you are looking for.

Let's start a dialogue and I can start to show you homes in the north area so you'll at least have an idea of what to look for.

Sound good?

Stew
stewkeene@yahoo.com
Web Reference: http://www.stewkeene.com
0 votes Thank Flag Link Thu Oct 23, 2008
Greg,

This is one of the examples where you get a great value from your Realtor, without having to pay him.

The short answer is that there is no general rule. Some banks are a lot more aggressive when pricing than others. To make to most out of it your Realtor will have to pull several comparables of recently sold properties and several active properties, and then adjust for their differences, upgrades, condition, etc. It is a fairly time consuming process.

Even knowing which bank owned the property helps. With experience we get to know which banks are more flexible than others.

It even depends on when you are planning to buy. By next summer the circumstances can be very different, and it will be reflected in the prices. The government is taking an active role on preventing foreclosures and if the banks assist we should be seeing a reduction on the foreclosures inventory.

Let me know if we can be of service to you, we are foreclosure specialist and have a deep knowledge in the area.

Good luck!
0 votes Thank Flag Link Thu Oct 23, 2008
If you're bidding on bank owned property, then you may have to bid over list! Many get multiple offers since they are typically already priced under market. Best thing to do is look at the location and current comps for the area, condition of the home, then decide if the price is already a good value, or if there may be room to negotiate.
0 votes Thank Flag Link Thu Oct 23, 2008
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