If it is listed at $400K they will most likely not go for $225K.
The bank like all sellers know what they want or need to get out of a house as far as price.
I think if the bottom line was $225 the home would have listed for around$250K or so.
You do need a Realtor to work on this for you.
Give me a call if I can be of assistance
Good luck with this home!
That offer is not unreasonable considering the condition of the property. When working with a bank they often won't move much on the price until it has been on the market for at least 45 days. The more supporting documentation you can provide with the offer the better they will listen. That would include comps and written bids from contractors. I just closed similar bank owned property and it took us 3 weeks, 7 contracts, comps and bids from contractors, but my buyer got the property at the price they wanted. If you have ammunition, patience and a good broker acting as an Agent (advocate), you can get it done! I would be happy to help if you don't already have an agent.
To answer your question "Does an offer around 225k seem unreasonable?" It sounds as if it is currently unlikely to be accepted by the bank. I wouldn't worry about it being unreasonable- the bank won't be insulted.
When making an offer on an REO you should feel free to offer any amount you like, They don't take it personally.
If the property is as damaged as you say and the comps are coming in around $350K, it will likely sell for close to $300K, so your offer of $225K is probably an exercise in futility.
But hey, what the heck!! They just might go for it.
Your Castle Real Estate
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Without visiting the property, compiling a scope of work and construction budget, and creating a performance proforma there isn't a good Realtor that can answer your question with the given information. My suggestion is to get in contact with an agent that has experience with investment properties. Otherwise you stand the chance of losing a lot of money.