If a house is a bank owned foreclosure property can I still bid lower on the foreclosure price listed

Asked by Sophie, Springfield, MA Wed Apr 29, 2009

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Grace Hanamo…, Agent, Cupertino, CA
Fri May 8, 2009
Hello Sophie and thanks for your thoughtful question.

The others are certainly correct that you can bid exactly what you want and that the bank will likely choose the highest offer. However, whatever you offer, consider the comparable prices in the area. If the REO property is located in a good section of town, in a good school district, and is in relatively good shape, then the bank is probably looking for the an offer at or very close to the listed price.

To determine more about the amount of money you should offer:

1. Ask the listing agent how many offers he or she has received for the home.
2. Check how many days the home has been on the market. A long time listing period may mean that you can come in with a much lower offer, and an asset manager may be better prepared to "adjust" the price down too.
3. Use a Realtor or qualified real estate professional in your area. A community specialist is likely to have better 'feel" for your market, it's comparables, and may even have worked with the bank that now owns the home.

Anything information that you can get about the home, and any advantage you can exercise when buying an REO will work to your benefit.

Good luck and happy house hunting!

Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose CA

P. S. Thumbs up to you, Dana. You're such a smart cookie!
5 votes
Chris E, , Beverly Hills Post Office, Los Angeles, CA
Fri May 8, 2009
The banks have done a brilliant job convincing every one that there are rules -their-rules.Forget every thing you know.Start that if you are a buyer you are the person with the MONEY their paycheck comes from yo.They are there to satisfy YOUR need not the other way around.You are the client (a paying client not like the one they foreclosed upon)When you get in that mind set you will command respect and you would find out very fast that the banks have bullied every one to submission. If you really understand the news and the economy you must understand that you have tremendous leverage as a buyer to let a bank (any ready to go bankrupt bank) bully you.
If they reject your offer there in no problem for you it is always a new house for you to make an offer.
For the bank is more time to have to cary a deteriorating asset.It is just matter of attitude and the old saying "money talks bs walks"
4 votes
Victor Kamin…, Agent, Edison, NJ
Mon May 11, 2009
TS and Agents with little or no REO experience...

Keep in mind the highest offers are not always the best offers, take into consideration closing dates, credit scores, buyers cash on hand, buyers credit, buyers compliance with the banks requirements to submit a complete offer package according to their requirements and all the contingencies and concessions, type of offers ie: cash vs. conventional mortgage vs. fha vs. fha 203k type construction loans have an effect on what makes an offer "The Best" offer.

Buyers agents aren't out there representing the sellers best interest like you say, that's silly what benefit would the buyers agent get out of that? Do you think there is some sort of big organized conspiracy?

Many buyers placing offers on REO properties tend to make ridiculously lowball offers. Keep your offers in line with current market values (not to far below and definitely not above unless you got cash and REALLY want the property) taking into consideration the condition of the property of course.

There is no rocket science involved here, the same rules apply as with any other real estate transaction with the exception that the banks have no emotional attachment to the properties and therefore will probably be a little more flexible with pricing which usually is already reflected in the base asking prices. By the way they ask the listing agent to establish a current market value by submitting BPO's for with suggested marketing and pricing in order to sell the property for 30, 60 and 90 days pricing models if they did not order an appraisal.

Don't turn this Q&A session into an excuse to bash Realtors or Banks, there are enough forums out there for that. Know the rules, guidelines and processes involved to come out on top.

Sometimes you may need to have an aggressive or I should say attentive agent that doesn't just fax offers and wait, start with an attentive agent preferably one familiar dealing with REO's... If the bank does not allow buyers/agent to present each offer personally, your agent should add an offer presentation sheet as part of the offer 1st page with status explaining date and details of offer that was presented signed off on by an authority from the bank stating the offer was accepted or declined which should also contain a place for them to make a counter offer or reason for simply declining.

There are ways to ensure your offer is getting presented, the buyers agent must ensure the listing agent is indeed presenting your offer to the seller (bank) and doing so in the best light. Although they are not suppose to, many of these bank agents are difficult to deal with and some of them wait to push through their own offers to get both ends of a deal, that is unfortunate and illegal. It is important to use an experienced agent "good agent" on the buyers side to represent your interests.
3 votes
Dana Schuster, Agent, Slidell, LA
Fri May 8, 2009

Another brilliant answer! if i was a buyer/seller you would be the one i would want in my corner!Thumbs upagain--lost count how many i have given to you!If I,m a smart cookie---you are the whole package! Please keep your great advice coming!
2 votes
Jeremy Shapi…, , Framingham, MA
Fri May 1, 2009

Great question! When bidding on a bank-owned foreclosure property, you can bid whatever you like. Keep in mind that the bank will go with the best offer they get, but often they don't get as many bids as they'd like, and your lower than asking bid may in fact be the best offer.
2 votes
Barbara Brown, Agent, Longmeadow, MA
Thu Apr 30, 2009
You certainly can bid lower, as Dana said. My experience has been, in this local market, that the investors are buying up the inventory in the lower price ranges. So if the property is in that price range, there will be multiple offers & the bank may get the asking price or above.
2 votes
Dana Schuster, Agent, Slidell, LA
Wed Apr 29, 2009
You can submit any offer you like,but need to be aware that lenders usually receive multiple offers on foreclosures & will go with the best & highest.
2 votes
Grace Hanamo…, Agent, Cupertino, CA
Fri May 8, 2009
Dana, and I feel the same way about you and your answers. Many thanks for the tremendous compliment!

Area Pro Realty
(Blushing madly)
1 vote
Victor Kamin…, Agent, Edison, NJ
Fri May 8, 2009
You can bid whatever you'd like but keep in mind "Some" banks will list a property at the lowest price they are willing to accept out of the gate and like Dana said in the first response here, these types of listings usually have many offers and they will take the highest with the best terms BUT.... You'll never know unless you make an offer, right?

Taking Action is Key and if you jump on it before anyone else does you may just be the highest offer.
1 vote
Dawn Welch, Agent, Los Angeles, CA
Thu Jun 4, 2009
Most defintely! But it's always best for your realtor to check out a few things. For eg.
-What's the pricing trend in the neighborhood
- prepare and review a CMA
- Find out if there are any offers on the table and apx. how many
- how long it's been on the market
and of course also take into consideration how much of a risk you are willing to take. But in this market everything is negotiable.
Best of luck to you.
email: Dawnwelch4homes@gmail.com
0 votes
Phil, , Guilford, CT
Tue Jun 2, 2009
Yes, but typically the listing is already discounted 80-90% to sell quickly and draw multiple offers. If its a new listing, you might lose the bidding war with a lower offer. If its an older listing .. shoot any reasonable offer and see what happens. On Avg. the banks only are accepting 90% of asking price or higher .. but you might influence a price reduction so dont let that stop you either.
0 votes
Abdul Motiwa…, , Orlando, FL
Sat May 30, 2009
Everyone has tried to give answer to this issue but have not come to conclusion. I feel acceptance of offer vary from bank to bank as well as several other factors like listing price vis-a-vis the prices sold in the area in 30 to 60 days time, location and availibility of homes in the area besides, condition of the property etc. Few months back, one of my buyer made an offer on a property, about 14% lesser than the listing price and was accepted. This month, another buyer made an offer for different property at about 3% lesser than the listing price but was not accepted saying seller has received several offers significantly higher that the listing price. So guess, what could be the criteria for making an offer?
0 votes
Zhuoming Zang, , Cupertino, CA
Thu May 28, 2009
Tell you story. I have a client who cuts $50000 from asking price for all properties that he offered.
After two and a half a year, he is still looking for 5% or 10 % bellow the asking price. He has paid
over $24000 rent per year. He expects to get a much lower price than market in good school district
such as Warmspring, Evengreen cupertino... You have right to offer at whatever price you like, but the
question is do you really want to buy a home or just play a game. Whenever you are going to offer a property,
you'd better to face the market factor. Study well about the past transaction in last 3 months. Compare with
the condition. If there is no other offer, you may try to put 5%-7% lower than asking price, surely bank will counter back. If the coundition is bad, and has been on the market for over 45 days, you can try 10%.
One more think is hire a agent who works hard. Some good property can be sold in few hours. I wish
you are lucky enough.
0 votes
Tom Winand, Agent, Salt Lake City, UT
Thu May 28, 2009
Yes you can bid below the price of a Foreclosure. Some of the best foreclosures are HUD homes. HUD homes are homes that were foreclosed that had FHA loans. HUD pays the bank for their losses and then sells the home as a HUD Home. Many area have special $500 Down Payment programs for owner occupied HUD home Purchases. One of the best resources for searching the nation for HUD homes is http://gohud.com/ you can register free. They have all the property inspection reports. The homes are updated every 48 hours for status. You can search the entire nation by a specific dollar value. So if you want to know how many homes are under $20,000 that easy it's 1253 HUD homes. Many of the HUD homes qualify for a FHA 203K loan.
Web Reference:  http://gohud.com/
0 votes
, ,
Thu May 28, 2009
It depends on your market. In Tracy, CA you can't go under asking unless the house has been on the market 60 days or longer. Banks have gotten smart and seem to be pricing properties at "fire sale" prices. Cash, close quick. Good Luck
Web Reference:  http://www.SusanGoulding.com
0 votes
Dave Harcourt, Agent, Cincinnati, OH
Sun May 24, 2009
I just saw the answer from TMS and boy, can I sympathize. As an agent, your clients look to you for direction in their transactions. With this foreclosure situation over the last year it is difficult to predict how any bank will respond to an offer. I had a client offer $75,000 on a property that was listed at $79,000. The property had been on the market for 9 months and had numerous price reductions. The bank ignored our offer and sent it to auction. It didn't sell at auction so we resubmitted the offer and were rejected. The listing agent told me they were considering sending it to auction again. This kind of thing happens all the time and it is darned frustrating. People say "well if this doesnt work their are a lot of other foreclosures out there." That my be true but in my experience as a buyers agent, most of the foreclosures in our area are really bad properties that will take a lot of money and work to fix up. Many first time buyers don't have the cash to do extensive repairs. The FHA 203K sounds good but it is difficult to work through and the banks don't want to deal with it. It is a tough situation and looks like its going to take a long while to get it straightened out. I wish everyone dealing with a forclosed property " Good Luck."
0 votes
TMS, , Riverside County, CA
Mon May 11, 2009
Chris, Thank you for your honesty. Have done quite a bit of home and not listening much to the media about this craziness going on. You are so right, I am the buyer. I will not let an agent or bank tell me what to pay or not pay for a home. I am seeing even in this thread not so true comments.

The banks are truly manipulating the market now, and having some of these listing agents do inside deals with them. I have heard the terminology double down, amazed how an agent can still make this kind of money when they do not even represent the buyer, they are representing the bank on these REO (which for the moment are much more inventory than regular sales).

Again the lender does not always take the highest and best offer, I am living proof of that. My bid was also the first in, saw this home before it hit the market, turned it in within 1 hour of it being listed on the MLS, and the bank still chose a lower bidder, FHA vs FHA, we have a large amount of money in the bank, stable jobs, but I will not go conventional due to the rapid deterioating rates. Right now seems like throwing your money away when this crisis is far from over.

So we decided to wait this out for a while and watch this crumble even further. Also looking at the Case-Schiller indexes, we are still way out of wack.

Thanks again Chris... Please comment more when you have time. :-)
0 votes
Dave Harcourt, Agent, Cincinnati, OH
Mon May 11, 2009
Some good answers, especially Grace. One additional thing to consider is that, in my experience, the banks would prefer not to deal with complicated mortgages. If you are financing through an FHA 203K and someone else is offering cash, the bank is likely to accept an offer of cash that is considerably lower than the financed offer. If you are the buyer offering cash, you can afford to make a lower offer. If you are making an offer that is mortgage based, try to keep the contingencies, such as closing costs, Seller paid title insurance etc. off the the contract. The banks want a clean offer with little or no contingencies.
0 votes
TMS, , Riverside County, CA
Sat May 9, 2009
Yes most lenders will take the best and highest offer. But not 100% of the time. Back in February, my husband and I bid on a home 11K over the asking price. The lender took the lowball offer, the sold even sold 9K below asking price.

Had my agent do some digging and the loan's were apple to apple (FHA vs FHA) and I do know that our FICO scores were not the issue as we are in the low 800's.

Go figure this one out.
0 votes
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