Foreclosure in Las Vegas>Question Details

Thiru, Home Buyer in 84770

To what extent a person can bargain on a house which is bankowned. Is there any space for that??? Generally

Asked by Thiru, 84770 Tue May 20, 2008

the bank just quotes what is still pending from the home owner...
How should we deal this???

Thiru

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Note that when you submit an offer to a listing agent representing an REO property, they submit offers to the trustee or bank representative. I have noticed in many of these sales, they hold out for the highest and best offer, so it may be several days before they get back to you (never mind any deadline for response you give them). Then they will have you sign a bank addendum, which waives many rights as a buyer. Bank properties aren't always the best "deals" around, especially if they get multiple offers.
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1 vote Thank Flag Link Fri Jun 6, 2008
Thiru, as you can pretty much gather from the answers to your question, the process is going to take time and will requires much research; go with a REALTOR® who can help take some of the frustration out of the process.

Good Luck,
0 votes Thank Flag Link Wed May 21, 2008
Thiru, if you have a real estate agent representing you, they should be the one answering this for you on any specific property you have in mind. Just note that most banks or their REO servicing companies negotiate with the top offer received. Those that bid too low usually don't have a second chance. There are some banks that counter all offers received with "please give us you highest and best offer" and then they take the best one. The result is the same. Your agent needs to find out of their are multiple offers and then go from there.

Good luck and best regards.
0 votes Thank Flag Link Wed May 21, 2008
You really want to do your research on bank owned homes.
There's actually a tremendous amount of information out there about the basics of making an offer to a bank, what to expect, how to price your offer, etc.

To make a long story short - you want to know as much about the property as humanly possible. You want to go back and pull up public records (your county recorder's office will have a wealth of info) - find out how much the house was originally purchased for, how much the owner still owed when the bank took it back, how long it's been in the bank's possession (sitting empty), how much it will require in repairs (if any) - and try to put all these things together.

Now - putting all that data together and using it to come up with a price to offer is where it gets tricky - and honestly is more then i'm even going to try to explain here. I think it's fairly obvious to say however that the more REO inventory on the market, the longer it's been sitting there, and the more the market would suggest it's going to be a long time before it sells - the lower you can make your offer. It still needs to be reasonable in terms of what your offer is in comparison to how much is owed on the property, and what fair market value for the home is. A lot of people make the mistake of expecting to be able to offer 20 cents on the dollar and get it just because it's bank owned. That's not the case.

Be aware that banks will negotiate with you - but it will be a much different process then negotiating with Joe down the street. Banks are interested solely in the numbers game, and will take much longer to get back to you. Don't expect a lot of incentives or extras thrown in. When you make your offer - be prepared to show that you have the ability to close quickly without issue - that will go a long way. A lot of banks are willing to forgo a couple thousand here or there if a seller is able to pay cash, or can show that they're capable of taking ownership very quickly. Banks are looking purely to minimize losses, and try to move the property as quickly as possible. The key is finding the right balance there. I would suggest making a strong, but low offer - be prepared to back it up - and be prepared to have it rejected once or twice.

You can get great deals on bank-owned property, but it may take some work and starting over from square one a couple times. You get rejected, go back to your data and try to figure out why (sometimes the bank will tell you, but don't count on it). Adjust your offer to compensate - and try again.
0 votes Thank Flag Link Wed May 21, 2008
Negotiations on REO homes differ depending on the community. I specialize in Butte County California and the banks ARE negotiating the prices of homes. There are many REO homes available in some of the communities, so don't be afraid to ask!
0 votes Thank Flag Link Wed May 21, 2008
It truly depends on the market in your particular area. For instance in Las Vegas, we have gone from 22 months of inventory to 7 months of inventory. Banks have become wiser and our placing the listing below market to receive multiple offers. It is working for them and agents can write several offers before they can get one accepted. This may not be the case in the area you are looking, so make sure your agent knows what is happening and be willing to make the best offer you can, which may be above the list price. When your agent shows you the comparative properties in the area that have sold in the last few months; if the property you like looks like a good value, other buyers will think so also. There are many experienced investor buyers that have entered our market. If the home is priced extemely well and shows well ( or price reflects work to be done), has been on the market a short time and you really like it, don't wait to make an offer thinking it will go down. Someone else will beat you to it. All the national economists are saying the crisis is over, which generally means we have reached the bottom of pricing. Be aggressive in your offer.
0 votes Thank Flag Link Wed May 21, 2008
All banks are different, I find some are more willing to deal than others. Looking back at previous listings and solds can help guide you. In todays market there are a lot of buyers looking at one property to get a bargain so if your buyer really likes the home, I always say make "highest & best ' offer for their financial situation. Making a low offer works only if the property has been on the market for a while and has not had any offers before. Sometimes calling the listing agent and asking some questions helps with the process.
0 votes Thank Flag Link Wed May 21, 2008
Every bank is different.

In Virginia we can actually look up what a Realtor (working for a bank) has accepted in their last 10 deals. This can give you a crystal ball into what they will accept. This one Realtor just dropped 9%. Well their last bank deal they also dropped.... 9%. Coincidence. I think not. We then saw that they accepted 4% under the new price, so we offered 5% under.

An agent's selling history is your best answer. (along with the traditional 101 stuff like CMAs)


If this doesn't get "best answer" I dunno what will. I will be blogging about this soon so sign up.
0 votes Thank Flag Link Wed May 21, 2008
Logically, you would think that bank-owned properties have "room" for negotiation. Unfortunately, once you've put in an offer on a few homes, you'll quickly see that, at least in Las Vegas, it is a bidding war. I can only speak from personal experience, but the last seven homes that my buyers have "won," were after we were told there were multiple offers. Then we had a second chance to put in our highest and best offer. The accepted offers ranged anywhere from $10,000 to $50,000 over the bank's asking price, and the buyer had to pay their own closing costs.

To add to the problem, there are so many qualified buyers and almost all are in the $225-250k price range, all looking for the same amenities in a home/area. Just to manage your expectations a little more, the listing agents are not taking the listings out of active status, even though the bank has an accepted offer. They like to wait until the seller has signed off on the paperwork, which usually takes weeks. This creates a lot of frustration after you get your hopes up, thinking you've put in a reasonable bid, only to find out the home was sold long before you ever saw it. I could go on with more stories and experiences, but the point is you want to find a Realtor who's experienced in the marketplace in Las Vegas now.

As far as the established listing price, as Damon answered below, it's based on what the home's value is based on comps in the immediate area. With so many REOs, the prices have been driven down, only to be brought back up by demand. What the bank is owed on the home isn't a criteria for its list price.

Feel free to visit my website below to see all the available foreclosures in Las Vegas.

Good luck in your search!
0 votes Thank Flag Link Wed May 21, 2008
Hi Thiru,
I'll send you some stats on bank owned list price to sale price ratios ;) As for the listing or asking price... it's usually based on one or more broker price opinions (BPO). Often it's actually less than what was owed by the former owner. Also, in my experience, it seems that there is more bargaining room as you go higher in price range. For example a bank owned home for $180k that hasn't been on the market long may actually sell for $180k or more, while a $500k home that's been on the market for weeks may have considerably more room for bargaining.
0 votes Thank Flag Link Tue May 20, 2008
Definitely. The bank is no different than anyone else. They don't know what the market is willing to pay. They do know what they are willing to accept, but even that changes. The price is meaningless, what's it worth to the market is what counts.

Good luck,

Jeffrey
0 votes Thank Flag Link Tue May 20, 2008
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