looking to buy my first home, quite a few are bank owned, how low is too low of an offer?

Asked by John, Clinton Township, MI Thu Nov 27, 2008

im looking at homes in the $40,000-$60,000 range in macomb county michigan ive heard of people making rediculous low ball offers and getting accepted. this goes for bank owned, forclosures and regular homes. whats alot? $5,000.... $10,000...?

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Monzo Group…, Agent, St Clair Shores, MI
Tue May 29, 2012

Market is not as soft as it once was. Please us link above to get an idea of what is out there
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Wally, Home Owner, Michigan
Thu Feb 2, 2012
Get yourself a buyers agent to help you sort out the market place. Don't ever fall in love with a property right away. Lots of deals to be had out there. I would never pay list price or above list price. That's stupid in this market. Find out how long its been on the market. Don't let the realtor tell you to act fast cuz it may not last long. The longer its been on the market the better chance you have to get a lower price.
We bought a foreclosure. The bank wanted $99,900. We started at $69,500 and settled at $77,500.
And watch out for the home inspectors. Most don't know their A@@ from a hole in the ground. They don't have to be licensed in Michigan so anyone can be a home inspector. I knew more than our hired home inspector. But we did hire one as it gives you more leverage in negotiating price.
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Cheryl Latsh…, Agent, Chelsea, MI
Tue Sep 29, 2009

When making an offer on any home, your Realtor should do a Buyer's Market Analysis for you to determine what similar homes have sold for in the area over the last 6 months. It is almost like doing a market analysis for a seller on a listing to determine list price, but instead you are doing a market analysis for a buyer to determine an offer price. This analysis will help you as a buyer determine what your offer might be. Also, you need to know how long the bank owned property has been listed for sale. The bank might be more willing to look at a "lower" offer if the home has been on the market for several months v.s. a home that was just listed. Hope this helps!
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Pam Bava, Agent, Rochester, MI
Tue Sep 22, 2009
Hi John, I work in your area all the time. My experience with bank owned is you have to come pretty close to the list price and sometimes even higher. The last 2 bank owned I wrote offers for, one sold for the asking price, on the market one day, the other had been on the market awhile and they took 4,000 less. It just depends how anxious the seller is. I'm also seeing multiple offers on listings lately which can bring up the price. Private owners can some times be better to negotiate with because they are anxious to sell. Then again banks are getting backed up with foreclosures now and probably will take offers. All you can do is put in something reasonable and see what happens. When you decide you want to get serious and work with an agent to buy a home they can help you with your offer. The seller will either accept your offer, counter or say no. Feel free to search for homes on my web site.
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Ron Ristovski, Both Buyer And Seller, Troy, MI
Sun Sep 20, 2009

Some homes are priced well and they are sold even more than the asking price. There are few good homes that are listed for $53,000 and sold for $62,000. Some homes are priced way too high and hence you can put a low offer.

As long as you feel the property is the worth in the area of location then you can make an appropriate offer.

Few banks / seller agents take the offer price close to asking price - few waits for more offers to come in and want to negotiate for highest and best.

Ron @ http://affordablemihomes.com
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Brian Luck, Agent, Chesterfield, MI
Thu Nov 27, 2008

The "record" selling price I've encountered so far on a repo was in St Clair County (Casco area) which sold for 69.7% BELOW it's current assessed value. The way I submit offers, either incoming for my own distressed listings or on behalf of my buyers, is to take a look at the average selling prices compared to their assessed values, and also to look at current list prices and also the projected market decline based on the last two years for the area in question. Your offer will also carry somewhat more "weight" this time of year, as the holding costs for banks can be higher in the winter months and I've experienced better sale prices right up through the Christmas Holiday. Hope this gives you some more insight!
Brian Luck
Keller Williams Macomb St Clair
email: brian@brianluck.com
0 votes
Frances Flynn…, , State College, PA
Thu Nov 27, 2008
One of our Trulia Voices wrote a terrific blog post, "What Do REO Lowball Offers Have In Common With Tyrannosaurus Rex?" The article offers excellent negotiating strategies for buying bank owned properties.

Good luck!

Frances Flynn Thorsen
Community Manager
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smith3gary, Agent, White Lake, MI
Thu Nov 27, 2008

Donald is correct, the Code of Ethics (if the listing agent is a REALTOR(R) requires them to disclose to your agent, not you, if there are competing offers and if any are their offers). In general, it's best to assume there are competing offers because others could come in after yours. Sellers will look at all offers and can ignore, counter, or accept any. Of course they would want the highest price and best terms offer.

Have a great Thanksgiving. emails come to my phone for a faster reply.
Web Reference:  http://mi-living.com
0 votes
Donald Bradb…, , 18951
Thu Nov 27, 2008
Hi John. If you need a good Realtor, please contact me. Through the Coldwell Banker Network, I can find you an experienced Realtor in your area that can negotiate this for you. There is no formula on this. The best is to look at all the homes in the area that have sold recently. Try to come as close a comparison as possible to the subject property. Ask your Realtor to see if you have competition , meaning are they getting any other offers? See how desperate the seller is. This will help you decide the answer to your question. In this buyers market, it is all about the negotiations. Make sure your Realtor gets you a great deal, but in the same time does not insult the seller, so they will not work with you.
Don Bradbury
Web Reference:  http://www.bradburyteam.com
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smith3gary, Agent, White Lake, MI
Thu Nov 27, 2008

I would agree, there is no magic number. The value of any home is dependent upon the location, condition, floorplan, and many other factors. Michigan allows real estate professionals to represent buyers under a signed Buyer's Agency Agreement. If you are not under obligation or contract with a real estate professional, I suggest making that your first step. Interview several without even viewing homes and get in writing what services they will provide and verify they have sold foreclosure properties before.

Before making an offer on any home, your Buyer's Agent will run comparable sales for the property to give you a range of values that similar foreclosures sold for in recent months.

If you need more information feel free to contact me through Trulia. Sample forms about Real Estate Agency Disclosure and Agency Responsibility Act are available on the website below.
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Vicky Chrisn…, Agent, Purcellvile, VA
Thu Nov 27, 2008
Congratulations on your decision to buy! I hope you have hired a competent buyers agent to assist you with these types of things. You should base your decision on the market place and the comps in the area, not on a magic formula (i.e. if asking price is X offer Z). There is no magic formula. Read my blog posts to help you! If you need a referral to an agent in your area, I'd be happy to recommend someone. Happy Thanksgiving.
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