Question About REO's And Making Offers
I found an REO that is listed with a realtor at $49,900. It needs about 10K in repairs. The market value after repairs is about 72K. This house was foreclosed on in March of this year. My question is: Will a bank take a low offer to get rid of the property or do they like to hold on for market value? I would like to offer them cash in the mid 30's.
I'm going to watch this thread, because I'd like to know also. (I've never dealth with REOs, but I want to buy my first home this way.)
From what I understand, it depends!
From what I've read: Banks would like to get the most out of the sale of a property. BUT there are times when they really want/need to get rid of the property. In otherwords, they become a motivated seller.
Don't hound them, but if they don't accept your offer, make the same offer weeks or months later. If it's a good deal now, it'll be a good deal then. So I'd just make offers regularly, until they either get rid of the property, or sell it to you.
--Mike
By your figures, the FMV of the property would now be $62K. If they've listed it for $50K, 'holding on' for market value isn't really the issue.
What you really want to know is will they take less. The answer is maybe. If it's been on the market a few months, they're probably ready to enterain offers.
By your figures, this is already a better decent deal. If it hasn't been bought by another investor yet, I'd double check my repair figures, or find out what else is wrong with it.
I doubt they'll take a $15K cut in price, but CASH does talk to REO's. If you provide a proof of funds letter with your offer, you'll probably at least get a counter.
Roger
I bought my first property as an REO that I happened to just stumble on. It had been vacant for over a year and looked terrible. It had also gone up for tax auction with the starting bid at $40,000 and no one put in any bids. I offered the bank $20,000 cash, as is. They sold it to me for $21,500 cash, as is. After cleaning it up, painting, and fixing a couple of broken windows, it appraised at $60,000. Then I got a mortgage on it to pay my parents back the $25,000 cash they loaned me for the purchase and repairs, LOL. I'm sure that was EXTREMELY lucky, and not the norm, but just wanted to let you know how my REO purchase went.
GOOD LUCK!
If your county has online tax records, you may be able to easily access the property records for that parcel. From there you can determine what the bank actually had to pay to get the home back in their name. You may find out they only put out $30K, so it would seem to reason that they may therefore seriously consider $30K.
There seems to be a lot of variation amongst the banks. Some will not budge at all on their price, and some will even take less than they put out just to get rid of the peroperty. I am sure there are multiple factors involved. Most all will counter offer your first bid, not matter what it is.
good Luck!