How to place an offer for a REO?

Asked by Lookyloo, CA Bay Area Fri Jan 9, 2009

Yes, I have an agent, but I want to get sme more feedback from other people...I've been looking at a lot of REOs that need some fixing up. I don't mind, I'd rather do it myself. My question is : if the list price is 300K and I anticipate work is needed, should I
1) offer a price higher than the asking just to secure the bid, get an inspection and hope it finds work that needs to be done, return to the bank and renegotiate the price
or
2) offer a price that I takes the cost of the work into consideration (which may be lower than asking), and not necessarily be the highest offer?
If using option one, how sucessful is it to renegoitate a price after the inspection (assuming the inspection finds issues)? Would the bank at that point prefer to work with you, or move onto the second highest bidder?

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3
Dave Heck, , Arcadia, CA
Fri Jan 9, 2009
I have found that banks have already taken repairs etc. into consideration and although they may give you some money back for repairs, they are looking for a as close to full price offer as they can get. At least that's what I have found in the San Gabriel Valley. I did 3 last year, 2 were full price and one was about $30,000 under the asking price. The 2 full price ones gave us money for repairs, the other did not.
1 vote
Arleen Harde…, Agent, Pacific Grove, CA
Wed Jan 14, 2009
If you are in the market to buy a REO keep in mind that competition is stiff, especially for the properties that are in decent condition and good neighborhoods. It's my job to educate my clients about the constantly changing market. As a buyer you quickly learn about property condition, location, list price and sales price which all affect what you are wiling to pay for a property.
After identifying the property that fits your criteria, and carefully reviewing a market analysis, I advise clients to write their highest and best offer based on all of our research, taking into consideration any repairs that you may want to make on the property once it has been purchased. When you are in a multiple offer situation give it your best shot. If your offer is accepted...great! If not you can walk away knowing you've done what you feel comfortable with.
0 votes
Tammy Kaspar, Agent, Plainfield, IL
Fri Jan 9, 2009
Your agent should prepare a market analysis for you which shows what comparable homes in the area have sold for so you can make a sound decision on offer price. Consider what the home would be worth in good condition, then subtract the cost of repairs to determine a reasonable offer price. In many cases, the house is already priced below market price due to it's condition and the fact that the bank wants a quick sale. Also, the price cannot be negotiated after the inspection. REO properties are sold AS-IS, so you can do an inspection; however they are under no obligation to provide you with credit for repairs. You can continue on as promised and purchase the property or you can cancel due to inspection issues.
0 votes
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