Foreclosure in San Diego>Question Details

Rick2627, Home Buyer in San Diego, CA

My wife and i are about to buy our first home

Asked by Rick2627, San Diego, CA Thu Sep 13, 2007

we found a great place for us. the house is owned by the bank and listed sold as is, and is also a short sell. With many homes in the area for sell and there are two next door to me for sell as well. Plus i also counted ten more with in walking distance. its listed for 399k, but i would like to offer 300k. looking for advice on this.

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8
Rick:
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?
2 votes Thank Flag Link Thu Sep 13, 2007
Hi Rick,
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.
Good Luck
Keep me posted
2 votes Thank Flag Link Thu Sep 13, 2007
Mr.P, Other/Just Looking in Arizona
MVP'08
Rick-
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.
Web Reference: http://TheMcGheeGroup.com
0 votes Thank Flag Link Sat Sep 29, 2007
If it's owned by the bank it's probably not a shortsale. You should understand how buying one of these properties works. It's not the same and usually there is much less disclosure and a lot more time waiting. Very few agents are actually successful closing shortsales so you have to make sure you educate yourself on the process if your agent doesn't know it. If it's a bank owned, you will have to be very careful not to go over any contingency period. Don't forget to look for regular sales that may take your offer and you'll be less exposed.
0 votes Thank Flag Link Wed Sep 26, 2007
Hi Rick, you have already received very good answers. I would like to just add a few things. First of all, I am assuming you are working with a real estate agent. If you are not, get one. These days, it's not unheard of that buyers submit several offers on different properties simultaneously. This is particularly true for short sale offers because the lenders take a long time and buyers have a long time to look for alternatives. What a bank will be willing to accept will largely depend on how much money is owed on the property and what value comparable sales show. At first blush, I would say that your chances at getting a $300,000 offer accepted are slim. When you make an offer on a bank foreclosed property, don't be surprised when the first counter-offer comes back at or near the asking price. You'll just have to keep making counter-offers. Banks are not emotionally involved. It's all about the bottom line and banks are motivated sellers especially in a high inventory market. Banks do not want to own real estate as it locks up funds that they could otherwise use to make new loans.

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.
Web Reference: http://www.go2kw.com
0 votes Thank Flag Link Thu Sep 20, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
MVP'08
Contact
Compare it straight up against the other REO's in the area. IE beds baths square ft. This will insure you dont buy overmarket. You are smart enough to make an educated decision, or else keep renting. You will do the right thing! Oh ya, the ? they wont even consider a 300k offer! I will bet you 399k
0 votes Thank Flag Link Thu Sep 20, 2007
Rick, All three answers so far have been good advise. Make certain you are going in protectec and have an agent who knows short sales and bank owned properties and can help you. I assume you DO know that having a realtor on the buying side doesn't cost you anything at all. It is paid by the selling side. I am in your area. If I can be of help in any way- please let me know. I would suggest pulling comps, and as you said, look at what is for sale around the area. A good agent knows how to give a BPO (Broker's Price Opinion) when putting an offer into the bank, showing them WHY they should seriously consider taking the offer you are presenting.

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!

Patti Phillips
2007 President, North San Diego County Chapter Women's Council of Realtor's
0 votes Thank Flag Link Thu Sep 13, 2007
Rick,
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.
0 votes Thank Flag Link Thu Sep 13, 2007
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