Foreclosure in Andover>Question Details

Ryan, Home Buyer in Blaine, MN

offer on bank owned

Asked by Ryan, Blaine, MN Wed Sep 17, 2008

If you have a house that is listed at $151,900.00 and needs about $20,000.00 in repairs to bring it to great conditon. It is live able now but needs repairs. How much is a good offer? Also can a realitor find out how much the bank would take for the house?

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Theres no rhyme or reason to what banks accept these days. Sometimes they accept offers that no one on earth thinks they would accept and then other offers that you think they will accept they reject and take forever to make a decision on them.

That listing price might reflect the current market price for that house. Look at some recent comps in the area to base your decision off that. All bank owned properties have their share of 3rd party opinions to justify the list the price but in the end it comes down to what the market is willing to pay.
2 votes Thank Flag Link Thu Sep 18, 2008
It has been my experience, as an exclusive buyers agent, that not all offers are submitted with all the attatched documents. Reason: The listing agent has a lower offer but will double, yes double, his or her commission if they forget some or all of the offer. This is the real world. Agents are not allowed to contact the seller (bank if forclosed) to check.
Solution; some banks require that the offers are presented by the selling agent on their web site. Smart! Many do not.
The buyer(s) may call loss mitigation dept to make sure the offer is presented. Put notification in offer. I.E. "Should this offer not result in a contract, Buyer(s) shall check with bank to verify receipt."
If the bank finds out offers are not submitted by their listing agent, the agent will lose all listings.
It is a shame a very few ruin it for all.
0 votes Thank Flag Link Thu Oct 7, 2010
I am late to the game. In my opinion, foreclosures are a value 1 in 10 to 20 depending on the location. It is a long term situation. The longer you stay, the better your decision will become. Housing's job is to provide shelter. If you buy a three bedroom house and you end up with three kids, you are short 1 bedroom, same situation with bathrooms. A functional problem. If the market value of for your potential house fixed up is $170,000, then go look at 170,000 comps and decide if your house is still of value. You may find out non REO properties are the better value. It is very simple what are you going to have when you are done, if it will be more costly than market comps. You have a loser. When there is no appreciation fixers are a huge risk for the amatuer. If there are a lot of other foreclosures in the neighborhood, chances the market will continue to decline are good. You must adjust your market values by 10-20%. If you are confident of a long stay, do some calculations, if they look reasonable, go for it. A couple of more tips, watch your design choices and workmanship, for every one thing wrong you see, count on finding 10 more as you start working. Your $20,000 might be low.
0 votes Thank Flag Link Fri Oct 9, 2009
Hi Ryan,

You didn't mention if you were going to make the repairs out of your own funds or take out a loan at time of closing? I have found that sometimes the banks will make some repairs, but it will require you or your agent to get 3 bids, and the work be done between your final underwriting approval for financing and the actual close date. Depending upon the type of work, say, a new furnace, which can usually be done in a day or so, I would space it out about at least a week between the two.

Kim Eisen
RE/MAX Realty 100
"Helping people make smart real estate decisions for over 28 years"
(651) 457-HOME (4663)
0 votes Thank Flag Link Fri Sep 26, 2008
Jason is right about banks and there pricing methods. Establishing the Value of the Home is up to you and your agent. There are a few clues you can get from the history of the property that are available and your agent would be able to help you. Banks will often list the property through one agent then change after a few months and move it to another agent. Flexibility increases with the number of agents that have had the property. Have your agent look at the pricing history. Calculate the price reductions based on dollar amount and % of listing price. Look at the time span between price reductions. I have found that banks will usually take an offer of the next price reduction. This doesn't mean that this is the correct price for the property but they are often reluctant to accept less. Sometimes you just have to wait it out until the price comes within range. It all revolves around the value of the home to you and what the home will be worth when the work is done. Keep the value of the neighborhood in mind when you are doing you remodeling work. Good Luck
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0 votes Thank Flag Link Thu Sep 18, 2008
Hi, Ryan!
My issue with the 203K program is that buyers have taken out those loans in the past to improve their homes and tried to turn around and sell them again too soon. Because of the appraisal is a snapshot in time of the value to be realized with the improvements done. Problem is, we've been experiencing a downward adjustment for over a year now. So, as long as you plan on living in the house for a while, a 203K loan might be a good option for you.

As far as a good offer, I agree with all of my colleagues here, that's the kind of information you can get from your REALTOR you've hired to represent and advise you about how these types of transactions go. The only way to find out what any seller would take for a house is to make an offer. Any agent worth their salt is not going to tip the hand of their seller without an offer in writing.
0 votes Thank Flag Link Thu Sep 18, 2008

The first thing we would recommend is determining what the recently sold comps are for this home in your target area. This should give youn a feel for if the home is priced high, low, or just right.

Once you have an understanding if it's priced accurately you are in a better position to start making pricing adjustments.

The bank or sellers will say thae the condition of the home is reflected in the asking price. Weather or not you believe or accept this will be supported by the comp information you have gather on the home.

It is fair and reasonable for a buyer in today's market to come in $20,000 under the asking price. Weather or not it is accepted is another issue.

Good luck,
The "Eckler team"
0 votes Thank Flag Link Thu Sep 18, 2008
No one ever knows what a bank will take or not take. The listing broker can get an inkling if they have received offers and teh see what the bank counters however they work for the bank, not for you, so they cant give you that information. Your best bet is to hire a buyer broker to represent you and advise you through each of the buying steps. In most cases you will not have to pay anything extra for representation, you should be able to negotiate that the buyer agent gets paid their commission from the listing brokers fee they offer in MLS. There are a few things to think of when buying bank owned. First do your inspections before you bid, the home is sold as is and most banks will not renegotiate with you after they accept a purchase price. Make sure you are pre approved and submit this letter with your offer, dont ask the bank to fix anything or put any contingincies into the offer, dont change anythiong on the banks addendums, make sure your deposit is at least 1% of the sales price and in certified funds. Lastll be ready to close within 30 days. Good Luck Ryan.
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0 votes Thank Flag Link Thu Sep 18, 2008

Working with your agent to purchase the home is your best bet. It really is hard to answer your question without a lot more information. Lean on your agents advice but make sure you have a good one to help you in this transaction. Not all agents understand the foreclosure process. Ask your agent point blank how many foreclosure transactions that I have transacted in the past 12 months. If you aren't impressed with the answer, find another agent who knows more about working with banks.

Keep in mind that the $20K in repairs needed may or may not have already been factored into the price. It is automatic that you just get to reduce that from the asking price because it needs the work. The operative question is, based on the comps what would the house be worth fixed up? From that number deduct the cost of repairs and that is what it is worth in its present condition. Your agent will be able to help you find comps for the property.

Cameron Piper
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0 votes Thank Flag Link Thu Sep 18, 2008
Hello Ryan. Talk to your loan agent about the 203k streamline program (see link below for more info). Although the property is bank owned, many banks will cooperate with the rehab loan program.

What a good offer is in your case depends on how competitively the property is already priced and how long the property has already been on the market. The longer the property has been on the market, the more likely it is that the bank will be open to all offers.

No, the Realtor cannot find out what the bottom line is. It doesn't hurt to ask, but the listing agent will most likely not know as banks don't reveal that kind of information and even if the agent knew, he/she would not be able to divulge that kind of information. The bank is no different from any other seller. If you were a seller, you would not want your agent to make that information available, right.

Good luck to you.
0 votes Thank Flag Link Wed Sep 17, 2008
Ute Ferdig -…, Real Estate Pro in New Castle, DE
Without knowing a lot more of the property, it is hard to say. Maybe the house is already priced at the point to take into consideration the repairs? If it's worth $180k fixed then it is probably good at its current price. If it would be worth less, then you need to take a similar amount off the price obviously.

If a bank is the seller, a bank will take $151,900. The bank is just like any other selller... they will not tell you their bottom line... would you in their situation.

Have the agent representing you write up an offer in good faith based on the comparables and what you are willing to pay and make the offer. Banks will counter if they don't like it.
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0 votes Thank Flag Link Wed Sep 17, 2008
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