Foreclosure in Indiana>Question Details

Jon Schechman, Home Buyer in Central, IN

What would you suggest as an offer for an REO listed at $125K (down from $138K original list price)?

Asked by Jon Schechman, Central, IN Tue Jan 6, 2009

It's been on the market for more than 6 mos in an area with little activity where it is the highest priced property currently for sale. The lender paid $145K at the sheriff's sale to take it back. Where should I start?

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It has been my experience in listing bank owned properties that the banks usually want the homes priced with the anticipation of a 30 day close. If they do not receive an offer, a formula is usually used to drop the price in increments until an offer is received. The lender may have taken the house back at $145, but they have usually earned monies during the time that the seller owned the property, on the interest they received. The lender has usually already done a BPO (Brokers Price Opinion) on the property by using a local realtor that they have a relationship with. I would suggest that you engage the services of an realtor that knows the area well and can present with your offer a Comparative Market Analysis to support your offering price. If there are other properties that are seller owned and are a better value you may want to seriously consider those. In most states buyers receive a property disclosure from the seller which lets you know everything that is wrong with the property. You do not receive such a disclosure on a bank owned property.
1 vote Thank Flag Link Wed Jan 7, 2009
Find out what the property is worth in the Current Market. Who cares what the mortgage is
or what the previous buyer paid for it. A local realtor can help you with a current assessment.
Then make an offer based upon what you as a buyer are comfortable with. In this Market
look for a great buy. Depending on whether you'll be using this as a principal Residence or
investment property and how much you want this house versus others can make a difference
on your offer price.
0 votes Thank Flag Link Sat Jan 30, 2010
Lots of good advice so far. Main thing: Get a Realtor and have them do comps for the last 6 months. If you are in a declining marketing base the offer on the downward trends for that area. A lot of banks will not counter an offer that is not acceptable to them so give it your best shot the first time
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0 votes Thank Flag Link Wed Jan 7, 2009

Our recommendation is to check the recently "sold" comps for similar property sold within the last 4-6 months. This information will give you an idea of what the bank will be considering when it reviews the offers. It will clarify your possible initial offer as well as your best price.

Good luck
0 votes Thank Flag Link Wed Jan 7, 2009
Simple question: is it worth $125K? Since it hasn't sold I doubt it.

One thing about REOs that hasn't been mentioned below is that there may also be an outstanding tax liability. Most lenders selling their REO properties put that cost onto the buyers in addition to the purchase price.

It's the highest priced property, there may be taxes due, and so I would suggest you move onto some other property.

Most importantly, you need to talk with a Realtor familiar with the area in which you are looking. They will be able to find out more information on this home, and anything else available
0 votes Thank Flag Link Wed Jan 7, 2009
call a realtor in the area of the home. request for a market analysis. have your realtor call listing agent to verify if property is still on market, also if there were any contracts on the home. After you have reviewed this information with your realtor of choice, make offer . DO YOUR HOMEWORK BEFORE MAKING ANY OFFERS.
0 votes Thank Flag Link Wed Jan 7, 2009
As many others stated, its best you link up with a REALTOR so they can get into the specifics of each individual property. Each home is so different that there is no general answer for this question. REMEMBER, Realtors do not charge one single nickle to buyers, our services are FREE of charge to buyers! Please feel free to reach out at anytime. Thanks!

Pete George
Century 21 Scheetz
Web Reference:
0 votes Thank Flag Link Wed Jan 7, 2009
Start with a Realtor...they will guide you from there.
0 votes Thank Flag Link Wed Jan 7, 2009
The Hagley G…, Real Estate Pro in Pleasanton, CA
Before you can make an offer, you will probably need to be pre approved (unless you are paying cash) and be able to show proof of funds when submitting your offer. What are you willing to pay for this property? Make an offer for the price you are willing to pay... or somewhat less in case the mortgagee counters your offer. Regardless, don't be afraid to make an offer... any offer. The seller will either (1) accept it; (2) reject it or (3) counter offer it. If you submit a low ball offer, I would include documentation (including pictures) of what's wrong with the property and cost estimates to repair it. If you don't know one or are not working with a real estate agent, I can recommend one to you... just email me at for help.
0 votes Thank Flag Link Tue Jan 6, 2009
Buyers agent great resource who can research property determine best interest for all parties submitting an offer Difficult to make a comment w/o seeing property backup info. and etc. You can submit any offer however best foot forward.
Web Reference:
0 votes Thank Flag Link Tue Jan 6, 2009
I wouldn't bid on an overpriced home. You are implying that there are more reasonably priced homes in the neighborhood, bid on those.
0 votes Thank Flag Link Tue Jan 6, 2009
There are many factors to consider when trying to formulate an offer on a REO property. You have laid out some of the specifics of the situation but each transaction is unique and needs to be examined as such. Banks tend to like clean offers with as few contingencies as possible.

Things to consider:
Is it move in ready or does it need work?
Are you going to be asking for additional concessions from the seller in your offer?
Type of offer ie. cash or is financing going to be involved?
Are there ANY recent sales comps to support their asking price?
What is the property's true value in todays market?
How bad do you want the property and what are your intentions with it ie: owner occupant or investment?

Obviously they are already taking a financial hit hit if they bought if for $145k not too long ago and are now asking $125K. I would suggest having an agent in your area that is experienced in dealing with REO's on the buyer side assist you with formulating an offer. When it comes down to it, it really depends on your own comfort level. Worst case scenario, if you come in too low they will either counter or reject the offer. If they reject then resubmit a higher offer.
0 votes Thank Flag Link Tue Jan 6, 2009
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