Home Buying in Chicago>Question Details

Eric, Home Buyer in Chicago, IL

Chances of being accepted with an offer 10% below asking price,property in foreclosure

Asked by Eric, Chicago, IL Mon Apr 7, 2008

The original listing price was $219,000 then the price was dropped to $199,000 ,condo needs some minor work(drywall,etc)

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Hi Eric - Good question - if your seller may be facing a short sale or foreclosure, you may find you have greater leverage with the seller still involved with the process rather than the bank. To Mark's point, if the seller has the equity, they may be more open to accepting a lower offer.

Be sure you have done your homework in regards to how this unit is priced relative to other similar properties that have sold. If a comparable unit recently sold for $209,000, the seller may already feel that they have priced their property accordingly. If a recent unit sold for $195,000, you certainly have reason to negotiate more aggressively. Any price reduction needs to be viewed in context with similar sold or pending properties. The original price of $219,000 could very well have been an unrealistic starting point. Recent sales data will help define the pricing parameters.

Some more food for thoughts - If a seller is facing an impending foreclosure, once the bank is involved, you may find that you have lost negotiating leverage. If the seller is still involved, the seller may be able to sell the property and still make up a short fall in the mortgage at closing without bank approval. Once foreclosure proceedings take place, the seller may be left without any negotiating leverage.\

Best of luck in your search!
Web Reference: http://www.thomasjhall.com
1 vote Thank Flag Link Mon Apr 7, 2008
Eric, the difinitive answer is...it depends. Assuming the seller has the equity to accept an offer 10% less than the asking price, is he willing, especially having already reduced the price $20K (how recent is that reduction)? Just because the property is in foreclosure, that doesn't necessarily mean the seller is wlling to reduce the price another 10%, even if WE see the reality in the alternative - a foreclosure auction. The seller may or may not. Also, he may have several months before the auction and, therefore, may want to hold out for a better price. Bottom line is there are many factors which weigh into the decision to accept (or not) any price. And we are not mind readers.

On the other hand, does the seller even have 10% equity? If not, an accepted offer would create a short sale situation, which is contingent on the lender's approval. So, the seller can accept anything he wants, but then you may find yourself waiting a month or two (or longer) to find out whether the lender has also accepted your offer.

Your best bet is to get these and other questions answered in order that you can know how you're able to proceed, or hire a professional to help you with those questions and your possible offer.

Good luck!
Mark
0 votes Thank Flag Link Mon Apr 7, 2008
Eric, You have a good chance of getting the offer accepted especially if the condo has been on the market for a while. The only thing you have to worry about is if another offer comes in. Otherwise, I think you have a good chance of getting the condo.
0 votes Thank Flag Link Mon Apr 7, 2008
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