Question Details

Chau180, Home Buyer in Westminster, MD

The house is foreclosure, and it is listed $175000.00. How much should i offer. This is my first time to buy

Asked by Chau180, Westminster, MD Fri May 8, 2009

a house. I have very credit. Thanks.

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Dear Chau180:

Unfortunately it is impossible to give an answer to your question without knowing more details. There is no "key" to open ALL THE FORCLOSURES. Each listing is unique. And the foreclosure pricing depends on the selling lender/bank's strategy.

1) Type 1 foreclosures (or REO properties, or lender owned properties) are priced on the market level and the negotiation techniques with those would be not much different from a regular sale (around 2-5% off of list price).

2) Type 2: highly overpriced properties when the lender/bank is out of state, and/or its asset manager responsible for the property is not experienced, and/or due to some other reasons (different lenders operate differently). Anyway, there could be REO properties listed 100% higher than the market value. As the result such homes would sit in the market as long as it takes the bank to adjust its price to local market condition 9sometimes as long as 18 months).

3) Type 3: underpriced properties. Well, lenders realize that they are competing with each other. The bigger the lender, the more inventory it has (say 1,000 REO properties vs 5 homes that a small lender/bank can have). So, the big lender is motivated (and can afford) to reduce the price to sell its inventory faster. Additional effect created by this type of foreclosure sales is generating multiple offers. I had as many as a dozen offers on my REO property listings, and I heard some agents had as many as 18-31 offers on some of theirs).

To be on the safe side (especially as a first time home buyer) do not hesitate to hire a local agent to represent you, to analyze the prices, so that you could work out a purchase strategy and benefit from it.

All the best!
1 vote Thank Flag Link Fri May 8, 2009
Buying a foreclosure is complicated,so i suggest you contact a local agent to help you through this and look out for your best interests.
0 votes Thank Flag Link Fri May 8, 2009
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