Wow, what a tough question! I would most definitely get with an EXPERIENCED agent in that area. Someone who knows not just the market but what comparables have sold for in that price range. I have had some foreclosure contracts sell for just 3-5% less than what they were asking but the properties were worth much more and some for as much as 40% less. (I've also seen them go for 5% more than they were asking as well) Importance of a buyers agent!
Zen, This is where you really need the assistance of your buyers agent. There is no magic number for what percentage should be asked off of a listing price for bank owned properties or otherwise. It all depends if it is priced right or not???? To figure that out you need an agent that knows the area and can do the research for you.
The other issue is...do you have a house to sell first? I would not waste your time writing an offer unless it can be non-contingent on selling a house first. The banks will not even look at this type of contingent offers. They need an immediate buyer, not one that might happen in 6 months to a year as your house is trying to be sold. Not to mention that you have more buying power when you do not have to make an offer contingent on selling a property first.
I purchased my 10 acre foreclosure with 3 year old 2,035 sq. ft. home, with 2 1/2 car garage with horse barn, pond, stream, even 11 deer all for 50% off the tax value. This home came with a stone natural fireplace, central air, we love our second home!
There is more to getting a good deal on a foreclosure than just the price. You may want to check out the Free Report available at http://www.MIforeclosureDeals.com There is a lot of good information in the report to help you be certain that you end up with a good deal not just a low price. As some of the previous answers mentioned the best thing to do is to have a Realtor working as a buyers agent help you evaluate the particular property. Be sure that the Realtor you pick has experience dealing with foreclosures, there are many issues that you need to be aware of when dealing with foreclosures.
If I can show you one example of 70% or less, can I stop my search! (LOL) A home listed for $449,900 sold for $250,000 on Union Lake Road in Commerce Township. Something like 55% of list price in this situation....
Send me your email address. I did a quick comparison for Oakland County over the last year showing list price vs. sold price. What this list does not show is the property re-listing at a lower price, which would show how much the Bank "wanted" to sell the property and what a Buyer was willing to pay. The 70% figure was communicated to me by fellow agents. However, the .pdf I can send you does show what Bank Owned homes have sold for in relation to the corresponding listing agreement.
Zen, Just last month you were asking about how to choose a Realtor(R). How good do you feel an offer would be contingent upon your home selling? Is your current home priced to sell this weekend? If not, and you do not have a pile of cash to use for the next transaction, your place to ask this question would be of your lender.
How much money will they lend with or without the sale of your current home?
With the stricter guidelines, will you even qualify for a mortgage?
If the property does not meet their guidelines, will they allow a construction loan at a higher interest rate until the home passes inspection and can be occupied?
How much work needs to be done to the home you're asking about? Are you able to do the work or will you need to hire contractors?
All of these things effect your ability to make an offer. Negotiating from strength will always get you the best deal on any home. I suggest you look at this article to see the types of homes offered and potential return on investment. It's a little dated but gives you a good overview of options.
Zen, it is very hard to say how the low the bank will go. Most banks send out an appraiser or Broker for a price opinion before it is listed. It should come on the market near (if not below) its fair market value. However it does seem that some banks are ready to unload the house sooner than others. If you are not working with one already, find yourself a good buyers agent who can look out for your best interest. The agent will be able to help you formulate a good offer based on the comparables in the area. Just to confirm is the house listed for $450,000?
In all cases less...but you already know that. Your agent should evaluate the home, neighborhood, updates that may need to be done to live in the home (assuming that it may be damaged). A hard and fast number is tough, but 70% on the dollar is a possibility.