J, Home Buyer in 11694

Are foreclosures and bank owned properties negotiable?

Asked by J, 11694 Wed Jun 4, 2008

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Jt, Home Buyer, Chicago, IL
Mon Jan 17, 2011
A home is only worth what the market is willing to pay for it. Be careful and fully examing a REO owned property before investing in it. I do not subscribe to the notion that the homes are listed close to there value....unless they are in move in pristine condition.

Take in to account the money required to repair the home. (Banks as far as I know do not inspect the homes and the agent that list them probably doesn't either..I say this because several of the homes I have looked at had no fixtures, copper pipe removed, flooded basements, ect...and no mention of this in the listing).

I have looked at 30 REO properties in the past 3 weeks. I would not have deemed one of them move in condition. While the asking price of the homes would have met the comps in the areas, the amount of work required to get them to even pass an FHA inspection would have turned a bargain into a money pit..

I just recently put an offer in for a home. I offered about 15% below the asking price. Why...the asking price was comped to the area, however, the furnace doesn't work, siding was missing on the outside, there was mold that had to be removed, many of the light fixtures were missing, ect. My agent said I didn't have a chance in hell. My opinion on my offer... I took the emotion out of it and if the bank does take my offer, I will make the needed repairs and the total cost I spent will be somewhere in the current asking price range.

My final summary...If the bank doesn't accept my offer, let the bank keep the home, or let another sucker who doesn't take the time to inspect a property buy it. I don't really consider an offer that takes into account items that need repaired to bring a home to comps in the area a "low" ball offer.
1 vote
Kevin Olson,…, Agent, Colorado Springs, CO
Sun Jan 16, 2011
Yes they are, and remember to use terms and conditions (contingencies) in addition to price to position your offer properly amongst any others.
0 votes
Joan Small,…, Agent, Atlantic Beach, FL
Sun Jan 16, 2011
It is important that you have a strong cash position
0 votes
Joshua Zarga…, Other Pro, Lynbrook, NY
Mon Jan 18, 2010
Everything is negotiable. You need to have the proper knowledge to be able to negotiate successfully.
0 votes
Pauline Char…, Agent, Brentwood, TN
Thu Jan 14, 2010
In my experience, everything is negotiable depending on the circumstances. It depends on the owner and their instructions to the selling agent, the length of time on the market, the intrinsic value of the property, condition and location of the property and a host of other factors. Nowadays with the large number of foreclosures on the market, they take a long time to respond and while you wait, other offers may come in and create a multiple offer situation. In those instances it becomes a bidding war and it is best to stay within your established limits for the property, remembering that there is usually no credit after an inspection is done and the seller will do no repairs. Buyers could get involved in a bidding war, outbid other buyers and find themselves the winner of something they paid too much to acquire and they have to do repairs to boot...
There are some cases where an offer is submitted and the acceptance is prompt. These are the times when some buyers think they could have gotten the property for less. Sellers know what they have and buyers have to find out. Buyers always need to do their due diligence in advance of making the offer and they should incorporate into their offer the worst case scenario. Buying foreclosures is not for the faint hearted. Some buyers balk at the process and others hang in there and wait out the process. It is best to realize that foreclosures can bring additional expense after closing so I advise my buyers to be sure they understand what they are getting into and to be sure how they will make it livable. These days they homebuyer tax credit can help with that to some degree. We provide comps and advise and help our buyers make the decision that will work for them.
Seasoned investors come in with a rock bottom figure they will pay for a property and they will not waiver. One investor‘s offer was not responded and he withdrew it. Several months later, the bank wanted to do the deal…
0 votes
Bill Eckler, Agent, Venice, FL
Mon Sep 1, 2008
Yes, banks have been known to negotiate. But keep your offer within reason. Accessing the comps for recently sold similar property from this location will shed light on where your price needs to be. Be assured the banks are also looking at this information.

A serious buyer should make a serious offer when dealing with foreclosures....otherwise the home goes to another buyer with a better offer.

Good luck,
The "Eckler Team"
0 votes
Thomas McGiv…, Agent, Farmingville, NY
Mon Sep 1, 2008
Good stuff. What I find on trulia is so many people answer questions without asking important ones.

Why are you considering a purchase of REO properties? This is a KEY question.

Second. What is your experience with regard to purchasing real estate?

There's SO MUCH information out there - it boggles the mind.

I agree with Gene 100%. I also recommend you do a little research on your own.

My initial reaction to your question is what some other people wrote - basically, everything in real estate is negotiable - however - that's the basic (very basic) answer.

Negotiating a foreclosure purchase will only be as effective as the experience of the one negotiating. Things like comps in the area is important. BUT ALSO - knowing the bank and getting familiar with REO departments (not an easy task) is also important. Also - the TERMS you as a buyer have to offer the bank mean alot as well. If you have no money in the bank, no credit - forget it. At least for now. Look to a partner - join a real estate investor club - attend some of the meetings/seminars.

If you've got money and credit - ask yourself again - what is the purpose of buying a foreclosure. This question is vital and I think it's a LARGE piece of the puzzle for you to figure out first, then ask questions.

check out the link.
0 votes
Debt Free Da…, , 85260
Fri Jun 20, 2008
In real estate anything is negotiable.
Web Reference:  http://GetPrequalified.com
0 votes
Kathleen A.…, , Rockville Centre, NY
Fri Jun 20, 2008
All real estate transactions are negotiable you have to do your homework to determine value. While I have read some of the other answers, they are not necessarily correct. Take for instance an REO purchase in Queens, NY that my client is closing on Monday. Option One bought the house back at auction.. It had 2 mortgages totaling $350,000.00. Our contract price is $215,000.00. Thats a difference of $135,000.00.

Not only are the prices negotiable, but so are the terms, to some extent. It is important to work with an attorney that knows where to push to get the terms you want such as having the Seller pay the transfer tax. While these homes are "as-is", the Seller does guarantee insurable & marketable title (this does not include violations, Certificates of Occupancy etc which are part of the municipal searches and are "info only").

Good luck!
0 votes
Maria Lindh, Agent, Lynbrook, NY
Mon Jun 16, 2008
Yes, bank owned properties are negotiable...but low balling an bank owned property (in my opinion) is not a good idea...start with an offer that makes sense. Good Luck!
Web Reference:  http://www.Maria4Home.com
0 votes
Gail Gladsto…, Agent, 11743, NY
Wed Jun 4, 2008
everything in life is negotiable.
Web Reference:  http://GailGladstone.com
0 votes
Pacita Dimac…, Agent, Oakland, CA
Wed Jun 4, 2008
There's always room to negotiate....but it's a different kind of negotiation. If you low ball an offer, it will be seen as precisely that, a low ball offer that may not generate the kind of response you want. Don't be afraid to submit a lower offer, but do note that most REOs are already priced according to the appraisal that the lenders have commissioned and close to their bottom line.

REOs are AS IS sales, so don't expect that they will agree to repairs. They typically don't agree to credits either.

Give it your best shot --- you may only have one chance at it --- and submit your best and highest offer, following consultation with your realtor who can provide guidance in terms of recent comps, value in the area, balance of the loan, how much the property last sold for, methods of negotiation, etc.

And submit as complete a package as possible
1. Preapproval Letter
2. Offer written on Lender's preferred/approved form
3. Information about your financial situation (some lenders ask for FICO scores)
4. Estimated HUD (buyer's) settlement
5. Cover letter itemizing highlights of the offer (so that the negotiator sees at a glance what your offer entails)

Good luck!
0 votes
Frank Martone, , Kendall, FL
Wed Jun 4, 2008
Yes, absolutely they are negotiable. It all depends on demand and how long the property has been on the Investors books and condition of the property. Keep in mind that it takes a while for the bank to answer back and in that time other offers can come in. The bank does not take offers in the order they come in, they take the offer that is the best in Price and Terms. Make sure that you have an Approval Letter, not a Pre-qual and make the closing as fast as possible....say two weeks from acceptance from the bank. Keep in mind that Foreclosures are sold in AS IS where is condition. Make sure that you have a good Title and Permit search done on the property before proceeding. I would also recommend that the home be inspected. A lot of people can be very vindictave when the bank taked their home away from them. The most obvious would be to make sure the toilets flush.
0 votes
Michael Corl…, Agent, Brooklyn, NY
Wed Jun 4, 2008
I concur with my colleague and add that, there are very few deals in the distress sales sector of the real estate market. Particularly when you factor the number of foreclosed and those facing foreclosure are largely homeowners with sub-prime mortgages.
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Jack Carpent…, Agent, Frisco, CO
Wed Jun 4, 2008

In most cases yes. The bank wants to get the loan off of the books. Don't look to steal it as the price is probably close to or below what is owed.
0 votes
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