Foreclosure in 91941>Question Details

Regina, Home Buyer in San Diego, CA

When bidding on REO's. Do you bid at or under asking price?

Asked by Regina, San Diego, CA Mon Nov 5, 2007

THe bank paid $795 and is asking $850. Do they expect to make money?

Help the community by answering this question:

Answers

17
Oh, my goodness, there are so many factors that go into How are REOs selling in your geographic area? In my area, only about 1% of the properties under contract are REOs, so there are not a lot of buyers for them. What is the condition of the property? The worse the condition, the less buyers want to pay. No one is going to do the work for free any longer. What is the actual market value of the property? Your offer should be based not on asking price but on market value. Are you buying a home for yourself or are you purchasing the property as an investment? If an investment, then determine a percentage off of market value less fix up costs and don't budge from that price.

The absolutely best advice I can give you is to find a realtor with actual and extensive experience working with REO buyers and do what they tell you to do.
0 votes Thank Flag Link Sun Oct 24, 2010
Thank you for your question about bidding on a REO property. I recommend bidding what you think a property is worth to you, with the understanding that many properties receive multiple bids and 'cash is king' when bids are accepted.
0 votes Thank Flag Link Sun Oct 24, 2010
I would look at comparable sales going back the last 3 or 4 months, then knock off 6 - 10 percent. The market is dropping and you don't want to be upside down from day one. I recently had an offer accepted for 450K on a house listed for 569K. It isn't a bid, it is an offer, however, I know what you meant :)
0 votes Thank Flag Link Sat Oct 23, 2010
Regina, regardless of whether the property is bank owned, a short sale or a traditional sale your offer should be based on what the home is worth to you, not on the asking price or what the current owner paid for it. To determine the worth to you, first assess your motivation for owning the property, what the current market value is, and what the cost of any repairs would be. A good agent will be able to help you assess all three and to help you determine what you may want to offer.
Web Reference: http://TheMcGheeGroup.com
0 votes Thank Flag Link Sun Oct 17, 2010
Regina

The Price you offer on any property Reo, Short Sale or even a Traditional Equity sale should be based on what comparable properties have been sold for recently. It doesn’t matter what the owners paid for it, how much money they want from it the true value is based on the Comparable sales.

That being said the Banks have researched the market and have an educated Idea as to the properties current value. This estimate is based on a “BPO”, a broker’s price opinion”, A BPO, is an opinion from an independent Realtor that is only looking to estimate the asking price for the Bank.

Your agent should complete a Comparative Market analysis to assist you determine what YOU Feel is an accurate price for the property. You can offer any price you feel comfortable with, but remember the Bank is expecting a reasonable offer.

You will be required to have an appraisal from your lender, if you are getting a loan. Should you appraisal be lower that the price you offered you will have the opportunity to either cancel your offer are renegotiate the price. Remember your lender will not allow you to finance a home that is not worth what they are lending you.

Regina I hope this helps. This process is confusing and this is one of the areas where a Realtor can truly help you get the home of your dreams. If I can be of any assistance please feel free to contact me through my web site http://jimstinnett.prudentialcal.com

Jim Stinnett
Prudential Ca Realty
0 votes Thank Flag Link Mon Oct 11, 2010
Regina,

You should have your agent analysis the comparable recent sales in the area. This is important to know because the bank who owns the property will want to obtain the "market" price for the property. It will also let you know a likely range that the property might appraise for which is important if you will require a loan to purchase the property. You and your agent could then work out an offer that you are comfortable with given the loan amount that you qualify for and what you are willing to pay for that property. Fortunately, as someone mentioned before, in the La Mesa area market, there is currently not as much competition at this price point as there is in the under $500K range.
0 votes Thank Flag Link Wed Mar 17, 2010
An REO is a property that the bank owns. If it was a foreclosure the bank didn't pay anything for it. Where did you get this $795 figure?

The best thing to do is have your Agent talk with the listing Agent about status of the property and if there are other offers. You may also have your Agent ask the amount that the other offers are. Many miseducated Agents for some reason think it's unethical to ask this question and to answer it. It's a valid question and if the Agent answers it you can get some good information.

If you were my client I would speak to the Listing Agent, complete a comparative market analysis, and review your budget and other options you have in the market before helping you write an offer on this property. No Agent can tell you what to offer, but if there are 5 other offers at 50K above asking price, you should surmise that your offer should probably be as competative if not better.
0 votes Thank Flag Link Sat Oct 17, 2009
Depending on the price point and the value of the home. We look up the assessed taxable value and make sure we do not pay more than the value. The banks tend to list the homes for less value to get a multiple bidding started. Consult an agent in your area.
Web Reference: http://ElizabethKBurr.com
0 votes Thank Flag Link Tue Aug 18, 2009
There are alot of factors to this question. Where are you buying? Whats the market like? How many houses for sale are in the area? Whats the Short Sale/Foreclosure Ratio.

There are alot of things that go into this. I am an REO agent for Phoenix/Glendale/Scottsdale/Peoria/Surprise in Az and other surrounding areas. I am seeing A TON of activity on ALL of my properties. All of them are selling for above list price. As I am not speaking for all REO's but for my properties they are going under contract under 15-20 days W/ multiple offers at and above list price. Typically if it is a newer property the bank will not budge on the price. Must be clean and above what they are asking, if not they will either counter at full or reject. As I am seeing alot more buyers per house you are competing to get the house. My banks are wanting best and final offers submitted NO COUNTERS. If the property has been sitting for a little longer then the bank is more open to being flexible, as they have little or no activity on the property. I recommend getting in contact with the listing agent and seeing where the bank is.
0 votes Thank Flag Link Tue Aug 18, 2009
Hi Regina,

Sorry to disagree with the Realtors from other states....but the San Diego market is on Fire. Your agent should do a CMA, but in most cases you will be offering above list price. The agent also needs to find out (if they can) how many offers the bank has. This will help you determine how much over (if at all) you need to offer.

You are more fortunate than others in San Diego that you are looking in that high of a price range. There is less competition in this range, so you may in fact get a deal

But remember that even if you pay $850K or above, the home was probably worth almost double that a few years ago.

Good Luck!! I hope you find your dream home.

Christa Borellini
01761296
Prudential California
Christab@prusd.com
0 votes Thank Flag Link Tue Aug 18, 2009
I am in the process of a REO and we bid under asking price and got it it for 6,000 under list test the market
0 votes Thank Flag Link Tue Nov 6, 2007
Hire a Realtor to represent you. Do comps to see if their asking price is in the ballpark. How long has it been on the market, condition and are they doing repairs or in "as is" condition. Base you offer on the facts. Good luck.
0 votes Thank Flag Link Mon Nov 5, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
MVP'08
Contact
Under the asking price!!! Don't worry the bank will counteroffer; start where you feel comfortable.
0 votes Thank Flag Link Mon Nov 5, 2007
When you say bid....is this an auction? Or are you placing an offer? The other folks are correct....hire a Realtor to help. They will supply comps and help you detrmine a fair price. Here are criteris that may make the bank take a lower offer:

Time on market
Condition of Home
Strength of offer
Will you use them as a lender?

Good luck!
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Mon Nov 5, 2007
The Hagley G…, Real Estate Pro in Pleasanton, CA
MVP'08
Contact
Yes, I agree with the below. You would bid what you think would be a fair deal or a really good deal. I saw a foreclosure recently where the bank was asking $550K and took $450K! WOW. It really depends upon the location, the market values, who else is looking, and the loss mitigation specialist you are working with. The bank employees want to get as much for the property as they can, however they aren't in the business of owning houses either. I agree with finding yourself a good local realtor and getting their opinion as real estate is a local business.
Web Reference: http://www.webberteam.com
0 votes Thank Flag Link Mon Nov 5, 2007
Regina, when the property is REO, the bank is simply the new owner. Like any seller, they want to sell their property. The good news is they are more motivated to sell, have no desire to rent the property, are not emotionally attached and will accept a reasonable offer. They set their price at what their Realtor considers current value. If it doesn't sell, they reduce the price. It's not based on what they paid.

To buy an REO property, align yourself with your own Realtor who can evaluate the market, send you regular REO updates and negotiate on your behalf. Check out our REO site http://www.OCBankDeals.com. If you are not from Orange County, we can match you with a qualified REO expert in your area. Just let us know.
Web Reference: http://www.OCBankDeals.com
0 votes Thank Flag Link Mon Nov 5, 2007
Hi Regina, Of course banks are in the business to make money. Much like any Seller they will price the home using the broker's opinion. Remember, this is the asking price not the price they might accept. In most cases, if you offer 3% below their asking price you will have a competitive offer. Using your Realtor to do a thorough analysis will help you determine the best ofer price. If you are more concerned with how much the bank profits...you are likely going to make a choice that is not pragmatic. Alwasy use factual data and trend information when purchasing Real Estate, regardless of ownership.

Michael
http://www.MichaelRobertsHomes.com
0 votes Thank Flag Link Mon Nov 5, 2007
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer