Last week, we put in offer for $260,000 on a foreclosed townhome that had listing price of $ 259,000 in

Asked by CubbieFan, Stevensville, MD Mon Jun 2, 2008

20147. We lost out on that one. Few days ago, we put in offer for $ 230,000 on another foreclosed proprty listed at $ 230,000 and lost out on that as well. Just how much more would we have to offer to have any chance of winning the bid?

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Weichert Rea…, , Leesburg, AL
Sun Jun 8, 2008
The truth of the matter is, Make sure your talking abt a true Foreclosure, There are considerable differences between Foreclosures, Short Sales, REO's, and Bank Owned, all have different rules, and I offten see clients calling a Bank Owned or Short Sale, or even worse, Pre Foreclosure, A Foreclosure, so Get your self an agent that does exactly that, it costs you nothing, but make sure this agent is well informed in the Process.... too many say they deal with them, but do not have the connections to make it happen!
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Eun Yi Chung, , Alexandria, VA
Mon Jun 2, 2008
Depends on the type of loan and the lender that you are dealing with. Please call me for more
details. I specialize in foreclosures in MD, DC, VA. Eun Yi @ 240 286-4324.

Eun Yi
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Danilo Bogda…, Agent, Reston, VA
Mon Jun 2, 2008
Yes, that would typically strengthen your offer because there's less of an appraisal issue. On the other hand, if the buyer has a mortgage through the same bank that owns/is selling the property, the bank may want to go with that buyer because they'll make money on the back-end as well.

It's not always just about the price, but the overall terms. Things such as lender, down payment amount, contingencies, closing date, earnest money, among other things come into play.
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CubbieFan, Both Buyer And Seller, Stevensville, MD
Mon Jun 2, 2008
What if we offer to pay in cash, without taking out a mortgage, would that better our chance? In the eye of the bank, if one person offers slightly less but offers to pay in full right now and another person offers a higher bid but needs to take out a mortgage.
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Don Tepper, Agent, Burke, VA
Mon Jun 2, 2008
Jonathan offers excellent advice.

I'd just add a caution that simply increasing your offer by a certain percent isn't always safe or best. Make sure you know what the house is actually worth. Some foreclosures are good buys. Others aren't. I did a real quick search of some townhouses under contract in 20147. These all appear to be short sales, some possibly REOs.

List price: $229,900. Described as "needs work." It sold for $300,000 in March 2004.

List price: $259,000. Sold for $281,000 in January 2004.

List price $259,000. Sold for $259,000 in July 2003.

List price $259,900. Sold for $350,000 in January 2006.

Youngster: These are not bargains. I can find you plenty of properties that sold for $300,000 in 2006 that are now listed for $150,000. Or properties that sold for $500,000 in 2006 that are now listed for $325,000.

I also took a look at recently sold properties, both short sales and "regular" sales. There's no real bidding wars going on that I could see. It's possible, as Jonathan implied, that your offers weren't as strong as those that were accepted.

But don't chase properties just because they're REOs or short sales. Pursue properties that offer genuine values. They're not difficult to find. And you won't have to go through the additional hassle that's involved in an REO or short sale.

Good luck.
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Danilo Bogda…, Agent, Reston, VA
Mon Jun 2, 2008
It all depends on how good of a value the property you're putting an offer on is in the first place. It also depends on how many other offers there are on the property.

If the property is a "diamond in the rough" because it's priced way below market value based on it's condition and the comps (similar properties that have recently sold), then you may have to go above the asking price.

This is not uncommon at all in the price range you're in. I've had several buyers pay more than asking price because the property was priced so low to begin with and there were multiple offers involved.

That brings me to my next point...if the above is true AND there are multiple offers, you're almost guaranteed that you'll have to go above asking price. It's up to you to decide on what your cap is on what you want to offer, but make sure that your agent gives you a CMA on the property and determines what fair market value is before you decide.

For example...if the property is priced at $230K and the fair market value is $280K, then you'd still be ahead by $30K if you went up to $240K. Make sense?
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Jonathan Bunn, Agent, Raleigh, NC
Mon Jun 2, 2008
The truth is that there is no science to foreclosures. I have seen the bank take the highest offer and I have seem them reject higher offers because of the fear a home won't appraise. It can be terribly frustrating.

The most important thing to a bank is sometimes not a really high offer. Banks like large down payments, quick closings, and little to no contingencies. They do not like the risk of you backing out of the deal and they have to list it again.
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