How much should I put an offer on a Bank Owned Home? Please Help.

Asked by Susie, San Francisco, CA Mon Nov 15, 2010

I found a house and thinking to put an offer but can't decide how much to put an offer. The price around the neighbour is between 550,000 to 650,000. The house I like asking for now is 529,000. On the market for 213 days and it was listed for 668, 000 back in April, 2010. They have 3 orther offers according to listing agent. What do you think? Should I put an offer lower than asking price since it's been on the market awhile. There is no information of the house condition yet. I am putting 50% down payment. How much should I put an offer?

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Mitch Larriv…, , Orlando, FL
Mon Mar 21, 2011
The answer depends on how much you want the house. If you REALLY don't want to lose it to a different offer, then give them what you truly feel it's worth.

Look at the comparables.. The bank (and your competition) is going to look at the same information. If you offer too low you will likely lose out. Don't be afraid to offer higher than the asking price - just make a fair offer for what you are willing to pay. If someone else gets it, that just means they thought it was worth more..
0 votes
Michele Mess…, Agent, Edgewater, NJ
Mon Mar 21, 2011
Your Realtor can show you what bank owned homes are selling for in the desired neighborhood that your looking to purchase in. If the home is on the market for 213 days it is possible that all the offers are lower and the bank may need close to asking... in some cases bank owned properties will sell for more than what it is listed for. Keep in mind the area your looking in homes are listed for up to 650,000. but the focus should be on what are all the homes selling for in the last 3-6 months there. As for the condition of the property you may want to invest in a home inspection it is a small price to pay to for piece of mind. Your Realtor will walk you through this process. If you love this home you may have to offer asking or higher to secure this property. Best of Luck!
0 votes
Jeffrey M. N…, Other Pro, Bethlehem, PA
Sun Mar 20, 2011
Susie: Review an article I did on this subject. It addresses REO's and what to be mindful of.

http://prohomeasset.blog.com/2011/02/09/tricks-and-traps-for…
0 votes
Elissa Morra…, Agent, Healdsburg, CA
Fri Mar 18, 2011
This is a great question. Work with your agent on this one. You and your agent should look at foreclosed homes sold in the last 3 months, compare their list price with sold price AND the number of days on the market. This will give you an idea of how the banks in your area are handling foreclosures in terms of pricing and timing. You'll find there usually is a pattern, and your agent should be able to help you with the right pricing and closing strategy. Good luck!
0 votes
Kathy Dolch, Agent, Rhinelander, WI
Fri Mar 18, 2011
The banks have Realtors usually 3 go in and do an updated market analysis. So there asking price is fairly close to what they expect to get. If this property has been on the market for 273 days the bank needs to get fairly close to that price or they would have adjusted it every 30 days.
0 votes
Antoine Pirs…, Agent, Oakland, CA
Mon Mar 14, 2011
Susie:

The first thing you need to do is work with a real estate broker, who can advice you on these type of property purchases. This type of info is way beyong the Trulia questions. I suggest you do it fast as well, seen the other offers on the property.
I always wonder why oieple prefer to do it alone, and put questions on Trulia, rather than work with an experienced broker.
I am here if you need me.
Antoine
Web Reference:  http://antoinepirson.com
0 votes
America Foy, Agent, Berkeley, CA
Sun Mar 13, 2011
Susie,

It's always best to talk to your agent to determine what an offer price should be--that's what we do.

My advice to you is to visit the property first to determine the condition. There is a reason the property has been on the market for almost a year besides the price. REO property (trust me on this) that is priced at or below market usually goes fairly quickly if it's in good condition and can qualify for a loan.

If the property is in good condition, can be financed, and you really want to buy it, put in an asking price offer and keeep your fingers crossed.

Banks know exactly how much their REOs are worth. Most lenders have 2 independent broker price opinions and a full appraisal done before a property hits the market as well as a monthly status check that touches on market condition.

If the property is in poor condition and won't qualify for a loan is when you'll really be able to come in lower than asking and still have a chance of getting the property. Give me a call if you have any other questions.
Web Reference:  http://www.americafoy.com
0 votes
Gina Odom, Agent, Santa Cruz, CA
Tue Nov 16, 2010
3 offers constitutes competition. Therefore, you really must look at comparables for the property and make a competitive offer. Some things to consider is how strong of a buyer are you? Have you secured an FHA loan or a conventional loan? What are you terms? Do they have any reports completed on the property? If not, you will have to pay for those reports to be completed and if they come back high, you will need to negotiate a new purchase price or a credit back. Be careful, however, if you have an FHA loan you will not want to negotiate a new price. You may consider writing a pest report into your offer. As you can see, there are many variables to this process. Find a Realtor who is familiar with this process and can guide you through this process.
0 votes
The Medford…, Agent, Fremont, CA
Tue Nov 16, 2010
Susie:

It’s been stated very clearly below, but let me add me 2 cents as well.

Without knowing the address and personally viewing the property, any guess we could come up with here as to price and terms would be total speculation. You need a local Realtor to go with you, evaluate the property in person, do a CMA (comparative market analysis) and coach you through this process. It should also be someone with a lot of experience in foreclosures and success in winning in multiple offer situations. If you don’t have a good local Realtor, get one. If you are asking this question in this forum because you DO have a Realtor but don’t trust their abilities, then find a Realtor you CAN trust. One with the experience you need.
0 votes
Helen Kwong, Agent, Berkeley, CA
Tue Nov 16, 2010
Hi Susie,

I have assisted many buyers in S.F. buy bankowned and short sale properties.

Since the listing agent already said there are 3 offers and the property is asking for 529,000. First you have to ask yourself how much you like the property? Second, I need to know the property address of the property you are interested in, so I can send you the sold properties price in the last 3 months in that area, as well as the pending properties (currently properties that has been accepted by the sellers and buyers are going through inspections and loan process) and active properties.

By sending you those sold, pending and active properties information, I can show you with facts and statistic how the current market prices are in that area. That we help you get a good feeling of how much you should offer, additional to the degree on how much you like this property I can help you come up with an offering price.

I have performed bankowned and short sale seminars for many banks and their customers. Feel free to contact me directly so I can answer your questions and send you information about what is bankowned and short sale are, so you can make a wise choice for your investment.

Helen Kwong, Realtor
510-846-6989
helen@helenkwong.com
0 votes
John Juarez, Agent, Fremont, CA
Mon Nov 15, 2010
I am stunned! Where are the San Francisco agents? You people should be all over this posting. This buyer is crying for help. She really needs the aid of an experienced San Francisco Realtor.
0 votes
Lisa Cartola…, Agent, Oakland, CA
Mon Nov 15, 2010
Susie,

Hi. Are you working with a Realtor? As a buyer, I would highly recommend you work with a local Realtor. They would be able to help you navigate the buying process and also ensure that there is someone in your corner making sure that your best interests are met.

When I work with buyers, we look at other comparable sales to determine a fair, market value offer. The offer definitely depends on the condition, location within the neighborhood and if there are multiple offers. If the property you are talking about recently had a price reduction, this could be why you are seeing multiple offers.

I highly recommend using the services a professional. In this area a buyer does not pay commission, so you are receiving the benefit of a Realtor's experience, knowledge of the area as well as knowledge of the local marketplace. The market has been in such a state of flux with many nuances, so having someone who has in depth knowledge and experience will greatly benefit you in your search for a home.

I hope this helps!

Lisa Cartolano
Alain Pinel Realtors
Web Reference:  http://www.LisaCartolano.com
0 votes
Bob Wegener, Agent, Moraga, CA
Mon Nov 15, 2010
Hi Susie,

Not sure where you are getting your information, but I was able to find a property pretty close to what you described and am wondering if it is the same property. Does the street start with E?

If it is or not, I would recommend your agent talk with the listing agent (sometimes not an easy task with REO's) to get a feel for what might be accepted by the bank. If you're unable to get any information from the listing agent and proceed offering blindly, the expertise of the agent you hire is critical.

Keep in mind that you are not bound to anything if your contract is written properly with contingencies in place. It's not "How much to offer" as much as it is "How to offer."
Web Reference:  http://www.bobwegener.com
0 votes
Bill & Elijah…, Agent, Oakland, CA
Mon Nov 15, 2010
Susie,
i would need a lot more information in order to give you worthwhile advice. And, at the same time would hesitate because there are regulations that prohibit me if you are working with another agent. Best advice is to talk to your agent about it. If you don't trust your agent's judgement then get a new one. If you aren't working with an agent then I would advise you to find a good one who knows Montclair, can learn your needs and assets quickly and who has experience with REO's
Good Luck
Bill
0 votes
carol thornb…, Agent, Castro Valley, CA
Mon Nov 15, 2010
Hi Susie, you need to find an agent who knows the value of homes in the area. Your agent can look at comparable sales and help you decide on a price. I recently worked with a buyer who was putting an offer on a bank-owned home in Oakland. She bid a little over, but the comps support her offer. Whatever you offer, make sure that you get thorough inspections including pest/termite, home and if appropriate roof and chimney. If you need any help, feel free to contact me.
Carol Thornberry
0 votes
Scott Ward, Agent, Berkeley, CA
Mon Nov 15, 2010
Susie:

There are a couple of ways to go about this - but here are some short answers/ideas:
1) Can you offer cash? If so, cash is what gets a lot of deals done for a lot less than the list price.
2) The markeplace currently drives a lot of info - hence the fact that this property has been on the market for 213 days tells you that the origional list was too high and the current price may be closer to reality - but you should be agressive with what it is valued to you - IE what work needs to be done, how fast, at what cost, can this be financed? etc.
3) Would this be a home or investment? As this too has a different set of goals and returns.
I do this type of transaction often and have a few other ideas that I can share with you.

Scott
415.225.4593 - cell
Web Reference:  http://www.scottward.me
0 votes
Ellen Lynch, Agent, Berkeley, CA
Mon Nov 15, 2010
Susie, I just want to second what Antoine has said. You need a good realtor in SF. Nobody else can help you with this. If you are not aware: Buyers do not pay realtor's commissions. Sellers do. The bank that owns the property will pay the commission, so you should get a realtor to represent your best interests. It is too hard otherwise. The strategy will involved detailed comparables of other properties,, detailed info about the condition etc. of this subject property you are considering buying, your financial situation etc. Putting together a successful offer to purchase takes skill. Do yourself a favor and interview some agents who work in the area of the house you want to buy, and pick one to work with. Good luck.
0 votes
Ryan Smith, Agent, Murrieta, CA
Mon Nov 15, 2010
I agree with Antoine, find an agent that knows this area. Talk to a few agents and select the one you feel the most confident and comfortable with. Having a agent work for you on the buyers end is invaluable.

Best of luck!

Ryan Smith
0 votes
Shirley Bell, Agent, Adelanto, CA
Mon Nov 15, 2010
full price or what you know what it will comp at. Most offers are subject to appraisal..if you offer too much some seller will ask for the different in cash..Have your agent to give you current comps on sold in the area at least 1 mile radius.
0 votes
Antoine Pirs…, Agent, Oakland, CA
Mon Nov 15, 2010
Hi Susie:

Pls find a good real estate broker and let him/her assist you with purchase STRATEGY.
I do not cover San Francisco.
Kind regards
Antoine
0 votes
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