Home Buying in 80906>Question Details

Scott, Home Buyer in Colorado

Interested in purchasing an REO. Does this offer seem possible or am I dreaming?

Asked by Scott, Colorado Mon Sep 8, 2008

This REO recently went on the market and foreclosed for about 300k from what I could find at the county website. It was listed awhile ago at over 400k. I pulled comps on recent purchases within the last 6-9 months and they averaged 350k. There is significant roof damage and interior water damage. Several rooms need serious work. Mold, drywall...the works. There are no upgrades, pretty cut and dry..."Plain Jane" if you will. I want to make a somewhat reasonable offer but know I can't even afford 300k. I am thinking to even get it close to comp values I would need at least 50k minimum without upgrades. Does an offer around 225k seem unreasonable?

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First, I would look at the comps in the last 3 months to be sure it's not lower than $350k. With the amount of work and time to rehab the home, I can't imagine why the bank would not accept $250-$275k if the true comparables come in the lower $300k's. Keep in mind this will also depend on the current trends in your specific market, whether it's a downward or upward trend. My personal belief when writing offers is that if you are not slightly embarrassed about the offer, then it's not low enough in a down market. Good luck with your offer and make sure you have a solid pre-approval or preferably a DU commitment.
1 vote Thank Flag Link Tue Sep 9, 2008
With the number of bank owned properties going up and the current number of buyers on the market as low as it is..... I'd say they'd be glad to get an offer of any kind. Run your numbers and make sure it works for you as an investment first. You need a large (20%+) cushion for the unknown. Remember you'll have to disclose everything so that water issue scares me (and it should be scaring the bank too). And DONT FORGET TO MAKE SOME MONEY on the deal. At the end of the day if it will sell for 350K you need to make at least 50K or forget it. I'd be more inclined to offer them 200K. I just saw a 1.3 million dollar home in Nashville settle for 680K with absolutely no issues with that home (it was a cash deal with a 48hour closing though). There was at least 50K in drapes and 75K in a Viking appliance package included too. The banks are hurting and only you can stop their bleeding. Good luck.
1 vote Thank Flag Link Tue Sep 9, 2008
Is this home on the market now?
If it is listed at $400K they will most likely not go for $225K.
The bank like all sellers know what they want or need to get out of a house as far as price.
I think if the bottom line was $225 the home would have listed for around$250K or so.
You do need a Realtor to work on this for you.
1 vote Thank Flag Link Tue Sep 9, 2008
Consult with your buyers agent, you can submit any offer. My concern is home move in condition. If not the lender may not approve a loan.
http://www.lynn911.com http://www.homes-for-sale-dallas.com
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1 vote Thank Flag Link Mon Sep 8, 2008
I would think of less than that. The issue surrounding mold reflects a complete problem by itself. What someone dreamed of selling for a year ago doesn't reflect reality. Real estate is location and demand. Well, your comps are what has sold in the last 6 months. Then you have to really look at why it sold for that amount. If you are a cash buyer, you can do well. If you are having to finance the home then you don't have the same appeal. Cash means no one needs to approve anything. You need to look at this like a wholesale proposition. I hope this helps...
0 votes Thank Flag Link Wed May 14, 2014
Scott,.. any offer is better than no offer. The Banks are not vested in the property,.. it is a number. If you are comfortable at $225K,.. offer that amount and see where it goes,.. the worst the bank will do is say no,.. the best,.. accept as drawn,.. or counter with what they will do.

Give me a call if I can be of assistance
Web Reference: http://www.springsnet.net
0 votes Thank Flag Link Wed Dec 2, 2009
I would contact a Realtor to work with you on this one. Again, they can get you the comps, etc, as you're already aware. I'd also get a contractor to walk with you through the house and put together a bid and budget for you to determine what it would take to bring the home up to "normal" and then to include extra to include what you'd like to have. Take the comp number and construction budget into consideration and have a Realtor put your offer together, which is done at no cost to you. I have a great contractor if you're in the Denver area.

Good luck with this home!
0 votes Thank Flag Link Mon Sep 22, 2008
Hi Scott,
That offer is not unreasonable considering the condition of the property. When working with a bank they often won't move much on the price until it has been on the market for at least 45 days. The more supporting documentation you can provide with the offer the better they will listen. That would include comps and written bids from contractors. I just closed similar bank owned property and it took us 3 weeks, 7 contracts, comps and bids from contractors, but my buyer got the property at the price they wanted. If you have ammunition, patience and a good broker acting as an Agent (advocate), you can get it done! I would be happy to help if you don't already have an agent.
0 votes Thank Flag Link Sun Sep 14, 2008
Are you working with an agent, or are you / were you a Realtor? When you say you "pulled comps" , it sounds like you have some experience in the field. If you are not working with an agent now, I recommend it: It won't cost you anything.

To answer your question "Does an offer around 225k seem unreasonable?" It sounds as if it is currently unlikely to be accepted by the bank. I wouldn't worry about it being unreasonable- the bank won't be insulted.
When making an offer on an REO you should feel free to offer any amount you like, They don't take it personally.
If the property is as damaged as you say and the comps are coming in around $350K, it will likely sell for close to $300K, so your offer of $225K is probably an exercise in futility.
But hey, what the heck!! They just might go for it.

Good luck.
Lil Lively
Your Castle Real Estate
950 Wadsworth Blvd, Suite 120
Lakewood, CO 80214
Cell: 303-746-8827 Fax:303-265-9318
Email: Lil@TopProducer.com
0 votes Thank Flag Link Tue Sep 9, 2008
Without visiting the property, compiling a scope of work and construction budget, and creating a performance proforma there isn't a good Realtor that can answer your question with the given information. My suggestion is to get in contact with an agent that has experience with investment properties. Otherwise you stand the chance of losing a lot of money.
Web Reference: http://www.judesandvall.com
0 votes Thank Flag Link Mon Sep 8, 2008
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