REO
I am ready to put in an offer for an REO through my real estate agent. It's been on the market for 8-12 months. Needs siding,windows, new drywall (house is 850 sq.ft). Sits on nice lot with great drainage. Build in 1900, pretty solid little house. In a neighborhood of $55-85,000
houses. I am estimating about $25,000 in repair. Listed at $25,000 What kind of offer would be feasible. This is my first. Any thoughts or advice? My agent is willing to put in any amount.
tess,
$55-85k is a big spread. You really need to tighten up the comps. Also, have you had a contractor come through to quote the repair work? Or are you sure your repair numbers are accurate?
IF $85k is the sale price and IF your repairs do not exceed $25k, than this looks like it could be a deal. However, if the sale price is closer to $55k and repairs exceed $25 than your deal may quickly become a disaster. Good luck on your investing!
Tess,
Check your comps again. This could be a great deal or a tight one that could go horribly wrong. get good comps. Also get a contractor to go through the house and give and estmate of repairs. This will help you sell your offer the the bank. They might be more flixible on the price than you think because it does need so much repair and it has been on the market for so long.
Happy hunting
Daryl
I agree with the above posts, however, after losing a couple houses to other people while I did my homework I started making the deal early but contingent on inspection. They are commited to me, I have an out if I find bad news.
A house that old could contain surprises. Are you sure the walls are drywall? How old is the electric? etc.
As to bidding, noone can give you much help, we haven't seen the house. There really isn't a formula to use, they are asking x so bid x. The best deal I ever got I payed the full asking price, bought one yesterday, asking was 32, I paid 22.
But there are some clues you can look for to get a feel for where the seller might be. During the time this house has been on the market has the asking price been steady or have they lowered it? If it's been steady the price is probably very negotiable, if 12 months ago they were asking 50 and have dropped it there's probably not so much room.
Mykle
Myckles comments (about paying full price) are right on. Try not to make your bid a function of how much money you think they will take.
Buy where you are happy buying. If I felt that the property was going to be worth $55,000 and would take $25,000 to get there I wouldn't go any over $15,000 and I'd need to be really comfortable with the numbers to do that. More than an estimate from a contractor I'd like to have a firm fixed bid and contract.
error on the side of caution. add at least 5k to the repair est. for the unforseables
