Newbie Investor 1st Deal ...am I On The Right Track
Found a house in my neighborhood while walking my dog. It's a REO and has been on the MLS for approx. 3 months. The properties appraised value is $161K, and it is listing for $137K. Comps in the area range from 130K-180K. I haven’t been inside nor had an inspection done to determine repair cost (if any). From peeking in the windows I could tell that there is a new coat of paint on the walls and new carpet. There is a new roof on the house as well. The home has a pool in the back and seems to be in nice condition.
My question is the listing price usually what the bank owns the property at? And what percentage of the listing price would be a reasonable offer to the bank. I have read anywhere from 80-85% of the listing price. I was thinking of offering $120K to see how desperate the bank is to get rid of the property. I can always go up!
And finally, if my offer is accepted is the equity enough to avoid putting anything down as I would have an instant 34% equity. Looking forward to your comments!
Its a lot eaiser to convince the bank when you have "cash" to spend. Cash will make people do crazy things You may want to try and get a hold of a hard money lender, or partner up with an indivudual who has money.
Don't be afraind to use a HML that can charge you up to 20% on your first few deals as long as you can still see a profit. Stick with the same HML and you will see your interest come down to somewhat better terms (10-15%) A
And do a little research on a short sales also
Call the realtor and ask what can they tell you about the property. I did that recently and found out a lot about an REO that I had just wandered aobut. The realtor told me about recent offers/contracts on the home that didn't go through, what repairs needed to be done, ran comps for the area, told me what the home originally leased for... I was surprised. He also told me that the bank was paying for a major repair this week and how much taxes they bank was paying and that after paying for these repairs, they probably would be very firm on their price. This house has been vacant one year, had an offer at 89% of what they were asking (before the bank had these repairs done), and did not accept. Maybe because this is a "pretty house", in overall great condition, in a ritzy neighborhood, and they think they can get more.
Just my own experience. Sounds like a similar situation.
Usually when a bank has held a house this long they become very motivated to move. This is not a high dollar house. This is a median priced house. I am surprised the regulators and the banks compliance officer have not pushed the sale of this house.
Hi:
I would suggest that you please see
the property inside yourself or thru an
Inspector for Repair Cost so that you
do not get an unpleasant surprise later.
This opinion is based on the assumption that most of the REOS are sold "AS IS".
SAYANA
Update!...Found out last night that the bank is making a bunch of repairs and has raised the asking price to $164K! I'm no longer considering this property.
I would like to thank everyone for their comments.