Take in to account the money required to repair the home. (Banks as far as I know do not inspect the homes and the agent that list them probably doesn't either..I say this because several of the homes I have looked at had no fixtures, copper pipe removed, flooded basements, ect...and no mention of this in the listing).
I have looked at 30 REO properties in the past 3 weeks. I would not have deemed one of them move in condition. While the asking price of the homes would have met the comps in the areas, the amount of work required to get them to even pass an FHA inspection would have turned a bargain into a money pit..
I just recently put an offer in for a home. I offered about 15% below the asking price. Why...the asking price was comped to the area, however, the furnace doesn't work, siding was missing on the outside, there was mold that had to be removed, many of the light fixtures were missing, ect. My agent said I didn't have a chance in hell. My opinion on my offer... I took the emotion out of it and if the bank does take my offer, I will make the needed repairs and the total cost I spent will be somewhere in the current asking price range.
My final summary...If the bank doesn't accept my offer, let the bank keep the home, or let another sucker who doesn't take the time to inspect a property buy it. I don't really consider an offer that takes into account items that need repaired to bring a home to comps in the area a "low" ball offer.
There are some cases where an offer is submitted and the acceptance is prompt. These are the times when some buyers think they could have gotten the property for less. Sellers know what they have and buyers have to find out. Buyers always need to do their due diligence in advance of making the offer and they should incorporate into their offer the worst case scenario. Buying foreclosures is not for the faint hearted. Some buyers balk at the process and others hang in there and wait out the process. It is best to realize that foreclosures can bring additional expense after closing so I advise my buyers to be sure they understand what they are getting into and to be sure how they will make it livable. These days they homebuyer tax credit can help with that to some degree. We provide comps and advise and help our buyers make the decision that will work for them.
Seasoned investors come in with a rock bottom figure they will pay for a property and they will not waiver. One investorâ€˜s offer was not responded and he withdrew it. Several months later, the bank wanted to do the dealâ€¦
Yes, banks have been known to negotiate. But keep your offer within reason. Accessing the comps for recently sold similar property from this location will shed light on where your price needs to be. Be assured the banks are also looking at this information.
A serious buyer should make a serious offer when dealing with foreclosures....otherwise the home goes to another buyer with a better offer.
The "Eckler Team"
Why are you considering a purchase of REO properties? This is a KEY question.
Second. What is your experience with regard to purchasing real estate?
There's SO MUCH information out there - it boggles the mind.
I agree with Gene 100%. I also recommend you do a little research on your own.
My initial reaction to your question is what some other people wrote - basically, everything in real estate is negotiable - however - that's the basic (very basic) answer.
Negotiating a foreclosure purchase will only be as effective as the experience of the one negotiating. Things like comps in the area is important. BUT ALSO - knowing the bank and getting familiar with REO departments (not an easy task) is also important. Also - the TERMS you as a buyer have to offer the bank mean alot as well. If you have no money in the bank, no credit - forget it. At least for now. Look to a partner - join a real estate investor club - attend some of the meetings/seminars.
If you've got money and credit - ask yourself again - what is the purpose of buying a foreclosure. This question is vital and I think it's a LARGE piece of the puzzle for you to figure out first, then ask questions.
check out the link.
Not only are the prices negotiable, but so are the terms, to some extent. It is important to work with an attorney that knows where to push to get the terms you want such as having the Seller pay the transfer tax. While these homes are "as-is", the Seller does guarantee insurable & marketable title (this does not include violations, Certificates of Occupancy etc which are part of the municipal searches and are "info only").
REOs are AS IS sales, so don't expect that they will agree to repairs. They typically don't agree to credits either.
Give it your best shot --- you may only have one chance at it --- and submit your best and highest offer, following consultation with your realtor who can provide guidance in terms of recent comps, value in the area, balance of the loan, how much the property last sold for, methods of negotiation, etc.
And submit as complete a package as possible
1. Preapproval Letter
2. Offer written on Lender's preferred/approved form
3. Information about your financial situation (some lenders ask for FICO scores)
4. Estimated HUD (buyer's) settlement
5. Cover letter itemizing highlights of the offer (so that the negotiator sees at a glance what your offer entails)