When bidding on a foreclosure, is the bank expecting the asking price or is it OK to bid lower?

Asked by Gail, 19115 Fri Dec 26, 2008

When bidding on a foreclosure, is the bank expecting the asking price or is it OK to bid lower? I have heard that you should start at 1/2 the asking price; I have heard that the bank won't accept anything lower than the asking price; I have heard that you negotiate as you would with any transaction. I am confused and need a little guidance.

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Lidialia, Both Buyer And Seller, New York, NY
Mon May 30, 2016
Foreclosed properties are already priced below market. If you are not in competition, try lower as you did, all they can say is no and come back with a counter offer. If you are in competition, remember when you start to bid over the sale price you may end up over paying only because of the nature of bidding. Have a top price you will pay, stick to it, there are plenty of other forclosures out there. Good luck

Web Reference: http://ForeclosureProcess.net
5 votes
Greg Madden, Home Buyer, 47906
Fri Dec 16, 2016
Foreclosure was listed at $29k originally, and was reduced $1k per month to $26k. Property had significant issues. Bid $10k, as-is, no conditions except a structural inspection. Bank countered with $26k. Did a detailed inspection, documented condition, and submitted to bank countering with $10k again. Bank accepted offer. Closed a week later. So it can be done, just do your due diligence.
3 votes
Joyce Barnes, , Tucson, AZ
Fri Dec 26, 2008
Hi Gail,
There is no one right answer to your question. Even though you are talking about dealing with a bank, it is still an individual person who makes the final decision to accept, reject or counter your offer. We don't know what specific instructions this person may have just received from his boss... eg. unload 20% of the inventory today, or don't settle for less than 90% of the appraised price, or get rid of this dog today! You get the picture, its the same as with any seller, there is no guarantee which price the seller will accept because it depends on their personal needs at the moment.

Since it is impossible to second guess the seller or bank, my advice would be to prepare an offer at a price you feel is fair for the property and what you feel comfortable paying based on the comps, advice from your buyer agent, and reflecting your ability to pay and desire to own the property. If you found a house you really want, don't play games but make your best offer, but if you are just trying to buy something and getting the lowest priced deal is most important, then take a chance and low-ball your offer.
3 votes
Stormyleena, Home Buyer, Atlanta, GA
Thu Aug 20, 2015
Buying at the court house auction or through sheriff sale is risky but you can get great deals. The catch is you have to have all cash, its as is and you get NO contract. Once you are confirmed as the highest bidder after the 10 day upset bid period is over then you get a UPS over night package stating when you have to close by (normally 21 days) and how much you need to pay. You must also be aware that buying at the court house steps you do have to pay the excise tax and any unpaid real estate taxes. Be sure that you are bidding on the first lien mortgage and not any junior liens. A title search is the absolute best thing you can have done to determine all of this http://ForeclosureIQ.com
2 votes
How would you know if you are bidding on is the first lien mortgage or the junior liens. Is this specified when doing a title search?
Flag Fri Jan 20, 2017
Bill Eckler, Agent, Venice, FL
Fri Dec 26, 2008

This depends on the individual bank, the particular home, and the situation.

A very quick way to not reach an agreement is to offer 1/2 of the asking price. Offers need to be in the ballpark and reasonable. Our recommendation is to be in touch with a real estate professional and request that they provide you with all recent comps for recently "sold" homes in this target area.

This information is the same information the bank will be previewing when the recieve your offer and information you need to consider prior to placing an offer.

An offer should be well thought out and something that you can rationalize as reasonable by submitting proof that supports your numbers.

The support of a realtor may save you more than you can immagine.

Good luck
The Eckler Team
2 votes
What if you've offered 15,000over asking in the beginning,can they reject it?
Flag Wed May 31, 2017
Annette Law…, Agent, Palm Harbor, FL
Fri Oct 10, 2014
This question posted Dec 2008

An evergreen question.
Over 80% of foreclosed homes are owned by 'FREDDIE' therefore have some similar protocols.
What is missing from the above question is any remark regarding market value. It is an important factor in the posted question and in today's market.

If market value is 100,000 and the house is priced at $80,000 it should be clear the strategy in play.

If market value is 100,000 and the house is priced at 130,000 it should be clear the strategy in play.

In neither case will a 1/2 asking price get a response.
Not today. Not in 2008

To win you must know the strategy, and one other piece of information.. Your REALTOR can disclose the missing element.

Best of success,
Annette Lawrence, Broker/Associate
Palm Harbor, FL
If you are serious, pick up the phone and call.

Clearwater Beach Studio condo for sale.
1 vote
Nanafontenot, Home Buyer, Columbia, SC
Sat Sep 21, 2013
I, too, would like an answer to this question. I recently placed a bid on a home and my highest and best offer was immediately rejected,

I placed a contract on the second property. There were no other contracts in place on this property. I was informed of the bank's counter offer. I countered their offer and never received an answer. After several inquiries as to the status of contracts being placed on this property, I was informed Thursday evening that a final multiple highest and best bid was due on Friday at 10:00 am.

I do not understand why I did not receive a response to my counter offer to the bank's counter offer as there were no contracts involved, initially. My last bid was $20,000.00 higher than my original, which now equates to $6,100.00 over the asking price.

If the bank had responded to my counter to their count, I would have accepted. This seems very unfair to me.

I feel like they are picking and choosing.
1 vote
We are in Exactly the same boat!
Flag Tue Dec 15, 2015
Alex Aunon, , Tucson, AZ
Sun Aug 22, 2010
Bidding on a foreclosure can be 2 different things. If you go to the courthouse and bid on a foreclosure, it is usually opened at what the loan amount is, every house being auctioned off is different. depends on who the note investor is and how much the servicer will get back from them. E.g BoFA is the servicer. Fannie Mae is the investor. A big portion due to how much is owed on the mortgage and what the note was purchased for, it will get reverted back to the benificiary. (The investor). When that happens the house or building will become what we call an REO. (Real estate owned). An agent the gets hired to sell it. based on what the BPO. (Brokers price opinion) determines what its worth. The REO agent will price it low enough to recieve offers. Most of the time; its priced low. Have your Realtor who is representing you the buyer to do comparisons and make an offer closer to what the value is. If you look at the sign in sheet and see more than 5 realtors looking at the house in one day, you know it will become a multiple offer situation.
1 vote
This is in follow-up to my above comment. My property transaction is also with the Fannie Mae Homepath industry. I'm beginning to feel they are not as legitimate as they profess to be.
Flag Sat Sep 21, 2013
Kamal Salim, Agent, Davie, FL
Tue Aug 17, 2010
Usually banks expect an offer at about 90% of BPO (Broker Price Opinion) and a net of 80% to 82%. So, have your real estate agent give you an estimate of market value, and start your bid at about 20% lower than current market value is. Asking price on a foreclosure is usually what a BPO suggested.
Web Reference:  http://www.kamalsalim.com
1 vote
Jesus (jesse)…, , Nashville, TN
Fri Dec 26, 2008
I looked over the replies and I am not sure anyone answered your question.....lol

Yes, it is ok to bid lower on a foreclosure and Yes, the bank is expecting the asking price.

Bank know how much thier homes are worth, they aren't idiots. They typically have upwards of three price analysis done by three different people before they even put it on the market. By the time the sell takes place, typically they have had additional monthly price analysis to adjust for any upward or downward movement in the market place.

Don't forget, these banks aren't going to bother with doing much countering so, if you make a low bid, just bear in mind you may not get a 2nd chance. They may just ignore your bid and move on to the next one when it comes in the door so, the rule here is......

1. Educate yourself as to how much the home is worth, a Realtor can help you here and
2. Make your first offer your highest, best and final offer.
1 vote
Yes banks know what they have in value on a normal home. When a house becomes empty for 7 + years with very little maintenance neighbors get annoyed and start calling city hall to complain. But should the condition of the home affect asking price? My answer is yes, if it takes some time and money to remove mold from a home then yes I'd offer less and mention it to the LISTING who can inform the bank. Also, one example a tree hit a foreclosed and did a lot of damage to the home, in the same month the bank gave the listing to the broker, closing price went down in my opinion 310,000 to 245,000. The tree had major damage before falling in a wind storm. In summary, the bank will want close to asking price but follow up if u see problems with the house, ask,questions and follow up in case there is problems with the first offers. I've heard of banks wanting asking price about 20'years ago until present.
Flag Sun May 10, 2015
The Kinslow…, Agent, Centennial, CO
Fri Dec 26, 2008
Wow! What a Great question. Our Team works mostly with Buyers and most of them are Buying lender owned properties. There's no answer, each bank is different and each deal is different. Your best answer for how much to bid on a particular property is going to come from your local Realtor. Some homes are power priced very low in hopes of generating multiple offers. When multiple offers come in the listing agent will probably come back and ask for highest and best from each offer. You won't know what the other offers are and need to discuss again with your Realtor. Other bank owned properties are priced in my opinion too high, on those you put in your offer and have your Realtor send an explanation discussing comparable properties. You can start out offering 1/2 the asking price, but risk losing the property to a higher offer. In my local market, the bank owned properties seem to be priced lower then the comps and the ones I've watched closely seem to get 89% of their asking price. Have fun with your adventure in buying and let's all hope that this is finally the bottom of the market!

1 vote
Spirit Messi…, Agent, Tucson, AZ
Mon May 4, 2015
Buyer may make any offer they want to make. Many times REO (Real Estate Owned) foreclosures already have an appraisal, when they list the property. Make sure to review the comps with your local Realtor and make your offer. In today's market if a property is priced well, it will receive offers.

Best of luck.

Spirit Messingham, PLLC
3rd Generation Full-Time RealtorĀ®
Tierra Antigua Realty
Direct (520) 471-6900
0 votes
Molly Mory, Agent, Tucson, AZ
Sun Apr 19, 2015
It is definitely okay to offer lower than the asking price on a foreclosure property. However, the asking price is typically already lower than the market value. (in some cases, not all). You would want a professional Realtor to do a CMA for you to educate you on the market value so you can decide on what price you are willing to pay. Also, you will see that you might get into a bidding war on foreclosures and they will sometimes sell above asking price. Also, caution- foreclosures are sold in AS IS condition. You will have your inspection period and can always ask bank for repairs, but in most cases they will not make repairs- but every bank/property is different. Hope you find this helpful!

Best of Luck!
0 votes
Noel Weather…, Home Buyer, Columbia, SC
Fri Apr 17, 2015
Do the bank review the potential buyer credit and financial information to help make their decision?
0 votes
Marsee Wilhe…, Agent, Tucson, AZ
Fri Oct 10, 2014
Unfortunately there are some brokers out there that either are negligent in their process or their hands are tied by the investor that owns the foreclosure regarding their policies and procedures. I know that probably does not help much. However, it is what happens out there.
0 votes
Louis Parrish, Agent, Tucson, AZ
Tue Aug 17, 2010
Make sure you know what the property is worth before you make an offer. The listing price could be higher or lower than the market value.

Even though it is clearly a buyer's market in Tucson today, I have observed sales where there are multple offers being made on listings which have been priced below market on purpose. The sales price may end up above the asking price but at or below the market value.

Be an educated buyer.

Louis Parrish
0 votes
Manu Kapoor, Agent, New York, NY
Sat Dec 27, 2008
My sugestion is to always bid lower, its buyers market.
Web Reference:  http://www.goforloanmod.com
0 votes
Dallas Texas, Agent, Dallas, TN
Fri Dec 26, 2008
Where is your buyers agent? Realtor should be assisting you decision making process on what is your better option.

Each home stands alone how submit a winning foreclosure bid, offers we place on foreclosures are different than another property. However it takes full understanding property, history secure win win for all parties.

NOTE: Banks are not like individual seller. Lenders have limited zero time to keep forwarding an offer back for counter offers. If they dont like your offer more than likely you wont receive a response. Sales offer must be submitted correctly for bank processor or 3rd party vendor take notice of your offer.

Web Reference:  http://www.lynn911.com
0 votes
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