Patrick has again given great - detailed advice. Since you are dealing with a bank - and not an owner who would shut you out cold turkey - I would say you could "offer" anything you like. The bank is a business and they won't get insulted like an owner could or would.
Having said this - I wouldn't go in fully loaded without someone there to catch me. It sounds as if you are wanting as much house as possible for as little as possible. Please keep in mind - there is no free lunch!
If you offer a 25% discount - and some miraculous bank fairy says "yes, we accept" - Buyer Beware...
Slow down - no offers until you do the inspection, no offers until you know what is going on behind the walls and electrical outlets... those pipes - what kind are they - and have they cause havoc in the past? How old is this house, whats the drainage like - and is there any dry rot??? Any wet spots?
Since it will be your first home - there will be so many unknowns popping out at you from all sides.
The only defense is a good offense. Find an experienced agent - someone knowledgable not only with bank owned properties & short sales - but an added bonus would be someone at least familiar with your neighborhood of interest.
The inside scoop on the whys & wherefores of this home can help beyond the inspection. Try to get as much history as you can. I could go on and on here, but suffice to say you need a professional to guide you through this maze - and again, as Patrick said - the bank has a slew of professionals looking out for their interests - shouldn't you?
Congratulations, Buying a home for the first time is a emotional experience.
Don't let emotions cloud your judgement at this time.
A Bank owned property and a Short sale are two different things.
A Short Sale the owner still owns the home, and offers it for sale at less than they owe the bank. The Bank must approve the sale. This is a long drawn out process.
It could take 5 days to 5 weeks or longer.
Bank owned property is just that. The bank has foreclosed on the property. The Bank is in the business of loaning money, not property management. The bank want to sell the property, however they have a system. To expect the bank to sell a home at a 25% discount Could happen, after they have had it on the market for 5 or 6 months. The general rule for banks is to lower the price slowly, to attempt to recover as much money as possible. So then just take the short sale? again the bank has to approve this. Bottom line they want their money back. The current owner most probably wont pay back that 25% discount.
Yes you can expect both homes to be AS-IS. Which for a first time home buyer may or may not be the smartest thing. Home repairs are expensive they require money. I still remember how broke I was after my first home.
It doesn`t sound like you have a Realtor. This is the last place you want to go cheap.
You need to begin working with a experienced Realtor who knows Short Sales and Foreclosures.
Remember the banks are selling you a AS- IS property, they have Great Realtors & Lawyer working for them.
Once you find the home you want to buy, you need to hire a great home inspector.
Keep me posted
Regarding what to offer: always keep in mind that the market is determined by what a buyer is willing to pay, not what the seller is asking. To determine a whether your $300K offer is reasonable, study what similar homes have sold for in the last 90-days. Regarding foreclosures, REO's and short sales...they are not always the deals most people think they are. Particularly now, while foreclosures are up, banks are not yet overwhelmed by properties they have taken back. So, banks are still looking to recoup their losses and not just "move" the property.
If you'd like some more guidance on what to offer, feel free to contact me.
For you as a first time buyer the biggest challenge will be to stay emotionally as detached from the buying process as possible, which is difficult when you are a first time buyer looking for a home.
Lastly, I would like to stress that you'll have to make sure that you don't try to save money by not doing all your inspections. If you have a friend who is a contractor, I would recommend that you get this friend involved. The contractor can help you spot issues before you even make an offer and the contractor can give you and idea of how much repairs might cost. The best of luck to you.
You will want to do a home inspection immediately if your offer is taken- to see what hidden repair needs there might be.
Let me know if I may be of help to you!
2007 President, North San Diego County Chapter Women's Council of Realtor's
Don't be fooled. Just because it is a short sale or REO (Real Estate Owned) doesn't mean you will get a deal. You may, but be careful. Many people think that if the home is in this situation, it will be great. What many people don't know it what a short sale or reo is. First of all, if the home is in "short sale" it means that the owner is in trouble and is trying to get rid of the home. They list the home at a price to hopefully get it sold. But just because they list it at that price, doesn't mean you will be able to buy it at that price. The bank has to approve it many times because the price of the home is lower than what the current owner owes on the property. The bank is trying not to lose money on they notes they write.
Also, the process takes at least a month, usually longer just to get an answer from the bank. And it may not be an answer you like. Then you just wasted a month waiting. Do you homework, or have your agent do the homework. Find out what the owner owes on the property. A short sale means the owner owes more on the property than what it is worth. They are definitely in trouble, but make sure you know what you are getting into. It is probably better to find an agent who will be a great negotiator to get a great deal for you on a property that you love instead of on a property someone "has" to dump.