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My wife and I are looking at a foreclosed property, and will likely be putting in an offer fairly soon. Since it's bank-owned I'm not going to offer their asking price. My question is more looking for a rule of thumb as to how not to lowball. At what point does a lowball offer become so offensive that the lender will refuse to deal with me? The specifics are that the property is being offered at $265k. For example, is an initial offer of $220k crossing the line into offensive? Or should I stick to something in the $240k ballpark? Or heck, should I offer $200k? It's been on the market over two months, and they just dropped the price $10k after putting some work into the basement. |
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I don't think a bank would get "emotional" about an offer unless they saw you as someone wasting their time. They are going to be looking at numbers, and have no emotional attachment to the property. I think the only way to know about the offer number is to compare to other foreclosures in the area-what were their sales prices/sq foot compared to their MLS listing price. Those numbers are public in most areas-you may need help finding the numbers. That may be worth a realtor to help with that function on a hourly rate. |
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Banks don't get offended. They're not homeowners; they're property investors, and their interest in the foreclosure is strictly business. Until recently, it was an "anything goes" market here in lovely uptown Phoenix. People were buying foreclosed houses for ten to fifty cents on the dollar. That's no longer true: as speculators have regained their nerve and their energy, a livable foreclosure that hasn't been gutted and doesn't require more than $5,000 or $10,000 worth of fix-up creates a feeding frenzy, with people bidding up the price. You can get a rough idea on Zillow what houses have sold for. Sometimes you can tell from Zillow whether places have been sold out of foreclosure, but this site is not always accurate. If you live in a big city that's been hard-hit by the crash, see if you can find a "Flippers in Trouble" site for your area. It takes some exploring here -- the site foregrounds high-end properties. But it's worth spending some time to cruise the site carefully, because you can find some mid- and low-range houses, and the site tells what people have paid in the past. Gives you an excellent feel for the foreclosure market in the regions where the the site's organizer is active. |
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I'd caution that not all banks will take a low ball offer. Where I live, banks give preference to all cash offers. If you can scrape the cash together, they love you. If you offer over asking price but need to finance 80-90% of the purchase price, they will likely sit on your offer. Interesting take.
(Nov 28 '09 at 16:07)
mbhunter ♦♦
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