What ever they are losing now will pale by comparison to what they will be losing in several months when the real estate market becomes truly flooded with foreclosures. These foreclosures will create the direction for pricing.
If your timeline is now....use this information to negotiate a better deal.......or wait a little while, for the banks to see the light.
It really depends on the bank. Some have literally gone out of business, others, ones with lots of resources and financial stabilitiy, are healthy and are absorbing the business the lesser lenders have left behind.
Banks that have a large inventory of foreclosures are moving a surprising amount of them by pricing them competitively. In Homestead, for example, many of the low-priced foreclosure listings are flying off the market as fast as they come on.
So don't be duped into thinking you can sit back and wait forever--the key is to identify the TYPE of property you want, what you want it for, and then do some good comparison shopping.
Many buyers I have spoken with are sitting back until "prices come down further"--and they might, but in the interim two things can happen 1) the dream home that really fits their needs goes under contract to someone else, and 2) interest rates come back up, and they lose whatever discount they thought they were getting on the home in their now higher mortgage.
The lower you come, the stronger the other terms in your offer have to be - financing, closing date, escrow amounts, etc.
Good luck with your purchase.
The Willard Realty Team.
Banks took a calculated risk when they accepted all these subprime loans and inflated appraisals, now they will settle for less after having made zillions of dollars in interest and write off their paper loses.
I work the condo market in Aventura florida and accross the east coast, and I'm seeing anything from 20% as high as 50-60%. It all depends on the bank and how large it is. The smaller the bank the smaller the hit they can take, at least with the ones I have worked with. The market at the moment is unbelievable, and as you say that property may go into auction soon. The way I see it is you don't lose anything in taking at stab at it now and if for whatever reason it doesn't work make a 2nd offer and then if it goes to auction you have another chance at it if you really want it that bad. I don't see many people going for 1 property all out since there are so many others in the market just depends how patient you are.
This market is great. Buyers and even some investors are able to pick homes and take their time doing the kind of research you're doing. This is great training ground for anyone looking to buy investment property or a primary residence.
Just a few years ago, one might have lost this deal. Now, with inventories high, buyers can take their time to cherry pick. It is great you've made the decision to buy and that you are doing the due dilligence. However, to ensure you don't loose a deal, make sure to include certain people in your team.
Typically, you will need a title company or attorney, a lender, a numbers person (accountant/CPA), and a Realtor who are savyy with investment property and who can advice you on every aspect of the purchase quickly.
There is a number of ways to get involved in this type of transaction, one of which is to participate in several auctions to test the waters. However, if you have your sights on this property, have done your due dilligence and feel comfortable with the numbers, go for it.
My word of warning is to make sure you stick to your numbers. Do not let emotion take over during the auction and then attempt to justify a higher offer price at the expense of buffers or profits. Those types of emotional offers during an auction have a tendency to backfire later.
It is nearly impossible to know a bank's bottom line. But if they say "yes" to your first offer, you probably offered too much.
Hope all is going (or went) well. Your feedback would be greatly appreciated.
Meanwhile, consider that I'm a professional Realtor and a Certified Distressed Property Expert available to assist you with your next investment transaction, anytime.
Wenceslao Fernandez Jr, BS, Realtor, CDPE
Keller Williams Realty