Home Buying in 92630>Question Details

Cheryl, Home Buyer in Lake Forest, CA

What should I offer on an REO property compaired to the list price?

Asked by Cheryl, Lake Forest, CA Wed Aug 27, 2008

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22
JohnnyB,

I find it interesting that all of these answers are 'crap'. Banks may be in trouble, but you must look at the stats. Are you looking at the numbers or just Realtor hating here?

The numbers support what the agents are saying. Eric - there may be a few instances where you can get 95% of list price but it's not common if you look at the closings. In Lake Forest in the last 90 days sold prices, averaged over 103 sales, were 100.24% of list price.

There may have been a day there were agents working in the industry to make a quick buck, but I can tell you that in this market, the agents that continue to work as Realtors, aren't just in it for greed. Believe it or not - I care about helping my clients succeed in the process. And even writing full price offers on several bank owned homes for one client is far from a 'quick sale' as you put it.
2 votes Thank Flag Link Fri Sep 26, 2008
All of these answers are crap, if you want to get a good price on a REO don't get emotionally envolved with any. Look at many properties, make many offers and one will get accepted. Banks are in trouble (some more then others) and want to deal, most of these responses were from agents and they are lazy. Of course they will tell you to give a full price offer, because they want the sale as quickly as possible. If you find an agent who wants to play low ball for you that probably means they have your best interests at heart not their own.
2 votes Thank Flag Link Fri Sep 26, 2008
I just sold three different REO properties- three different buyers.... and we learned the hard way. In Orange county- you MUST offer the list price like the other agents said they are USUALLY priced right- one buyer we wrote 22 offers- all full price but they had an FHA loan with a special down program that takes extra time. We were beat out many times by investors with cash. So the story is 1- have your loan READY- not just pre-qual- get the process started. Get a lender that knows FHA if that is what you are going to use. 2. Make a strong offer- they typically don't do termite, repairs etc. so don't ask 3- be prepared for a counter that says give us your best a final offer. ! If you have other questions about the process let us know!
Web Reference: http://www.rita4homes.com
1 vote Thank Flag Link Wed Aug 27, 2008
I represented a buyer last month on a REO and he offered $1000 more than the asking price and his offer was accepted within 24 hours. There were no other offers at that time and buyer had great credit. We submitted 2 pre-approval letters along with the offer. He learned the hard way by offering $15,000 less on a short sale prior to this offer and never heard back.

Also, be sure in your offer your agent has you ask for all of the normal things that would be included in a regular sale: home warranty, pest inspection, natural hazard inspection, etc. You have to ask. If you don't they won't offer to pay for it. Even though Countrywide accepted the offer but stamped every page of their acceptance documents with an "as is" type of clause, they treated this offer as a normal sale and paid for everything we asked for. We did not ask for closing cost assistance. Good luck.

Carolyn Voet, ePRO
Committed to Excellence
Windermere Real Estate
Indian Wells
760/774-6510 (cell)
http://www.carolynvoet.mywindermere.com
MailTo:cvoet@sonic.net
1 vote Thank Flag Link Wed Aug 27, 2008
I have recently represented a buyer in this area in a price range where every listing was either bank owned or a short sale. I would be very careful about writing 30% below list price on a bank owned home. These properties are generally priced pretty aggressively. This inventory is selling very quickly with tremendous investor interest. Every single bank owned that we wrote on was in multiple offers.

I would have your agent ask the listing agent if they already have offers on the property. Check the comparables, figure out what you are willing to pay at write the offer for that. Make your offer strong with a solid deposit and short contingencies. Have your loan in place and ready to go.

There are some great REO deals. Good luck
1 vote Thank Flag Link Wed Aug 27, 2008
Cheryl ... you should be careful and always work with a Realtor member of NAR who is an agent with experience with homes in your area. Have a good talk with this Realtor. I expect that they will be careful and tell you the truth. That's an often overlooked ingredient in your consideration of what real estate agent to use. After you hire this person, keep in regular contact, so that you always know what's going on. Best wishes to you if you consider making an offer on an REO property.

Harrison K. Long, Explore Group Properties, Coldwell Banker Previews.
0 votes Thank Flag Link Wed Dec 10, 2008
Hi Cheryl, There are a lot of great responses here from real estate professionals. The key to writing any offer is having your agent research the area you are looking at and gives you as much information as possible so that you can decide what is the best approach for achieving your homeownership goal. I have been working with buyers all over Orange County and each area is a little different for REO properties. In Lake Forest you have several different areas that are unique in how you would write an offer that would be accepted. Some of the areas you have to be more agressive and write an offer at or over asking and other areas you can go in lower and ask for seller concessions (closing costs, repairs, etc.) The best buy right now are REO owned properties, the banks usually price their listings very competitively, so if you purchase a REO at or lower than asking you are getting a great buy! There are a few listing agents that will price a home at a rediculously low price to encourage a multiple offer frenzy - I usually recommend staying out of that mess. If you are looking for a really great buy it will be a property that has been on the market for a while and usually needs a little more work. I've seen quite a few that just need cosmetic repairs. The banks do not want to keep properties and they will reduce the price until it is sold or goes to auction. It takes patience and a lot of work from your real estate professional to help you find the best home for your particular needs and ability.

Find an agent that you can trust and that will work hard for you and together you will decide what is the best offer to write to achieve your goal of homeownership!
Web Reference: http://www.ochomesales.info
0 votes Thank Flag Link Fri Nov 21, 2008
Cheryl ... good questions about your offer price on an REO home. One of our clients offered the asking price on a condo. The bank received other offers to compete. Our client increased his offer to buy the home for $20K more than asking. So our client's offer was accepted, and he won the home. They moved in last month and are pleased with the opportunity.

Harrison K. Long, Realtor and Broker, Coldwell Banker Previews
For The Best Home and Property Search Web site check out
0 votes Thank Flag Link Fri Nov 21, 2008
It's totally up to you. They can just reject, counter or ignore you if they don't like it. Talk to your agent, but in the end, it's up to you.

Kim Eisen
RE/MAX Realty 100
"Helping People Make Smart Real Estate Decisions for over 28 Years"
Experience Counts!
(651) 457-HOME (4663)
0 votes Thank Flag Link Fri Sep 26, 2008
I do agree that banks are trying to hold to their asking prices and why shouldn't they... they need to protect themselves and work the numbers... also, look at the current economic situation this Country is in due to the mortgage/housing status.

HOWEVER: We as agents must write any and all offers, that is our duty. You are not only making yourself look foolish if you upset a potential buyer but you are shooting yourself in the foot if the bank would in fact accept or counter a low offer. Yes, we are educated in our field and do know the comps, but we do not have a crystal ball and cannot ASSUME we know what someone will take, even if it is a bank. Any offer from a qualified buyer in this market is a "great" offer! And there are investors out there still making money on "flips".

I do agree with Johnny that you cannot get emotionally involved with a property, but I DO NOT agree that we agents are all lazy and unethical.

Cheryl, please consult a professional agent before making an offer on an REO... and Good Luck!

Maryann Lawler, REALTOR
Keller Williams Realty of Greater Manatee
Direct: (941) 586-8257
Maryann@MaryannLawler.com
0 votes Thank Flag Link Fri Sep 26, 2008
Linsey, I hear ya. I said on average, county wide, banks are receiving 95% or more. Some areas do better than that as you point out in Lake Forest and Sandra pointed out in Newport. JohnnyB is a "flipper" and his days are over. He is now having a hard time finding a "qualified" agent to write his "lowball" offers and he is upset. I had someone call me 2 weeks ago asking me to write an offer of $460,000 on a $799,000 in Rancho Santa Margarita on a bank owned home. I told him that his offer was a great down payment but where was he going to get the balance? He even said he was putting 20% down and that I should tell the bank his offer was "great". I had a great laugh and then told him the stats which of course he disagreed with. He told me he could buy homes at 70-75% of the banks asking price. I had another great laugh, thanked him for providing me with the comedy and hung up the phone. Agents like Linsey, Sandra and I know the truth and the facts because we are in the trenches everyday and see if for ourselves. People like JohnnyB are just upset that most agents today won't write an offer of 75% of asking price on a bank owned property because they know it will go in the trash can. http://www.socaloceanviews.com/professional1.shtml.
0 votes Thank Flag Link Fri Sep 26, 2008
Tony, we were talking about bank owned homes only, not foreclosures. It is NOT necessarily highest and best offer. I offered an all cash offer for a Rancho Bernardo home at $500,000 and the bank accepted our offer. Then they told me they had a backup offer at $525,000 so if we hiccuped, they would take that offer. 2 days into escrow my client decided to take out a loan instead of all cash. This is legal and it is his legal right to do so. This is only part of what I was talking about posturing and structuring your offer, if you can read between my lines here:) Banks today are getting multiple offers on most if not all homes they have and it is well documented that they receive on average 95%. Short sale and foreclosures are a totally different animal.
0 votes Thank Flag Link Tue Sep 2, 2008
I would be careful of going in at 95% of asking price not knowing what the situation is. I just bought a home that was a foreclosure but it was still on the market 90+ days before I made my offer. I offered well below 5% less and got my offer accepted. If it had been on the market just 1 or 2 days and already had offers, I would in no way have gotten it if I offered even 1 penny below asking price. I already had missed out on 3 houses by offering below or even the full asking price.
Beware of anyone who tells you to go in at a set discounted rate. You are either not going to get the house you want or you are going to pay too much. No matter how much posturing and negotiation might be needed, the highest and best offer is going to be the one the bank takes.
0 votes Thank Flag Link Tue Sep 2, 2008
Bank are averaging 95% of their asking price. I deal with many buyers trying to buy these properties and there is certain posturing and structuring to get an offer accepted as banks are getting multiple offers. I can do this for you as many agents don't know what is needed. You can visit my website and search all bank owned homes here: http://www.socaloceanviews.com/professional1.shtml. Good luck.
0 votes Thank Flag Link Tue Sep 2, 2008
Here in Newport and surrounding areas we are seeing the bank owned homes go over asking and with multiple offfers. The banks aren't paying attention to anything that isn't within 5-10% of list price, but you risk losing the home if you aren't closer or over.

Your first offer should be the highest and best because the banks are not always giving counter offers.
Web Reference: http://www.OCBeachBlog.com
0 votes Thank Flag Link Fri Aug 29, 2008
Talk to a local agent, one that has been working with buyers purchasing REOs. The first 6 months of this year, our market was flooded, and it seemed like all I was doing. I put together a blog with answers to many questions like this. I hope it's helpful. If you do not have an agent, please hire one, and a good one. These can be very murky waters. If I can provide you with a referral to someone in your area, please let me know. VChrisner@kw.com
0 votes Thank Flag Link Wed Aug 27, 2008
I have represented several buyers in Lake Forest on REO properties recently, and most of them have sold for OVER the list price. The banks are pricing many of them quite aggressively, and expect multiple offers. More often than not, they will wait at least 5 days after putting it on the MLS, then tell all the buyers to come back with "highest and best."

That can be nerve wracking, because you don't know who or how qualified your competition is. You just have to come back with a price that you will feel good about if you get it, but at the same time, not be upset if you got overbid by $1000. It's a personal values decision!

Good luck -
Vicki
Web Reference: http://LiveLakeForest.com
0 votes Thank Flag Link Wed Aug 27, 2008
Each property stands on its own too many variables to give a pat answer. It depends on what is happening in the neighborhood. If many REO's and short sales are there then you need to look at the listing price and what has sold and how long ago the last home sold. We would need to know how long each of the homes has been on the market and it would not have hurt to know how much is owed on the property. Last but not least how many loans exist on a short sale property. Once you know this you have a handle on the property and can then find the price you need to have the best chance of success.

I would be glad to assis you.

Tim Lorenz
(949)282-2521
Web Reference: http://www.markandtim.com
0 votes Thank Flag Link Wed Aug 27, 2008
Cheryl,
I agree with Linsey. An offer of a set amount below asking price on an REO will likely get no response what-so-ever from the lender. Have your agent speak with the Listing Agent. Although he/she will not tell you what other offers are, your agent will get a good idea of where you need to be in your offer. Most importantly will be Comps. Banks are not giving properties away. Yes, they have to lighten their portfolio of REO properties BUT, they have to answer to shareholders as well. They will not let a property go @ $200,000 if the market says it should be $285,000 ! If I were a shareholder in that bank, I'd want the Chief Credit Officer fired for giving my money away.

Most importantly be reasonable. Good clean offer, strong earnest money deposit, few contingencies if any and great financials / pre-approval / proof of funds to close and you'll get the propety you want !

Best of luck,

Cheers to you,

Thom Colby
Realtor
Southern California & Houston, TX
2008 Chair, Pacific West AOR MLS Committe
2008 Member SoCal MLS Board of Directors
2008 Member SoCal MLS Steering Committee
2009 Member-elect, Pacific West AOR Board of Directors
2009 Member-elect SoCal MLS Board of Directors
Web Reference: http://www.thomcolby.com
0 votes Thank Flag Link Wed Aug 27, 2008
I'm with Linsey on this one. Many REO properties are being listed below what the minimum opening bid was at the Trustee Sale even. Orange County is different than a lot of places in that there is a ton of investor money here and most RE Investors know that the prices aren't going to get much better than what they are today.

Ask your Realtor to show you the comps and make your offer according to the comps. Chances are good that it will turn into a multiple offer situation in many of Orange County's more decent places to live.
Web Reference: http://www.400kHomes.com
0 votes Thank Flag Link Wed Aug 27, 2008
Dear Cheryl,

I do not suggest a standard percentage below asking price for offers. Is the property priced well now? Are there multiple offers on the property? Is the property new to the market or has it been sitting for a bit? Without the answers to these questions, you can't possibly make an educated decision.
I would highly recommed that you ask an active, professional agent to pull comparables for the area and to give you some hard data. Also, your agent will be able to negotiate tough for you, and will walk you through every step of the way. 9 times out of 10, the bank will pay for your real estate agent and your closing costs; but only if you offer a reasonable amount and have a solid pre-approval letter from your lender.
If you don't have an agent you are working with and don't know where to start, please let me know and I would be happy to place a referral for a top notch agent in your area to help you.
Hope this helps and good luck,
Maryann Lawler, REALTOR
Keller Williams Realty
(941) 586-8257
Maryann@MaryannLawler.com
0 votes Thank Flag Link Wed Aug 27, 2008
Cheryl,
Begin 30% below asking price and have available a substantial earnest
deposit payable upon aceptance with your "AS IS WITH THE RIGHT TO INSPECT"
Contract. If possible, don't garble the contract with contingencies unless
you need financing. Banks will look at lower offers if they are cash.
If you need financing; before you make any offers get a"Pre-Qualification Letter"
to accompany your offer. When making offers on REO's-Bank Owned, lenders
will respond usually within 24-72 hrs. so you'll have a response and their
counter offer and the process goes on. Be sure to have your agent go over the
HUD final closing statement ; we've been seeing Title companies charge
buyers after the Bank agreed to pay closing costs and they choose the Title Company.
We recently save our customer (buyer) $750.00 in miss applied costs.
Hope this Helps;
Brooke O'Malley
Real Estate Broker
Mortgage Broker
Licensed Real Estate/ Charity Auctioneer
0 votes Thank Flag Link Wed Aug 27, 2008
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