Posted by John Corey on January 05, 2006 at 18:21:21:
Matthew is correct. You want to know you have your financing or your cash lined up before you make the offer. If a bank is going to discount they want to know that they have a done deal subject to the paperwork.
Banks have deadlines (end of the month, end of the quarter, end of the year) so they will get more aggressive to get a deal done if they need to hit certain numbers before the period ends. Also be aware that potentially the end of the period is not exactly on a month, quarter or year end based on a traditional calendar. Some banks close their books in November or other cycles.
One thing that does help is when you find a property that has been on their books for a long time. All banks have to get rid of them before the regulators start asking questions.
Also understand that most REOs come ‘as-is’. Hence there could be defects that will block conventional lenders from supplying a loan. Either know the properties condition or be prepared to arrange alternative funding if your primary source backs out when the paperwork goes to underwriting.
John Corey
PS. Note that banks in markets that are appreciating will have much less incentive to discount then a bank holding property in a market that has been flat for years and the winter is coming.
I want to make an offer on a bank owned property… How low dare I go in my offer or do banks “deal” at all? They bought the house for 60k and are asking 52K. I know there are several variables but does anyone have a thought on this? TIA
Posted by D.Lyles on January 09, 2006 at 18:43:00:
The variables matter. It doesn’t matter what the bank’s number is, you should pay attention to after repair values, repair costs, soft costs, etc… If this property is an investment property for you, then after you plug in the numbers to your formula, you will know what to offer. Remember: If it don’t make dollar’s, it doesn’t make sense.
Posted by Nate-WI on January 05, 2006 at 15:24:55:
Brad,
I’m going thru my first purchase thru a realtor on bank owned property. They wanted 55K this past August. Then 49K. Then 46K. I offered them 38K and my realtor looked at me like I was an alien. I told him to write it down and see what they say. After some countering we agreed at 40K. A couple things that I go by. #1 If your not embarrased by your offer then its to high. #2 Its NOT your problem. If they say no way to you then who cares my man. They have your number or the realtor your working with if they want to re-consider.
Posted by Matthew G on January 04, 2006 at 10:46:53:
Brad-
goes as low as you want. All the bank will do is either counter or reject it, the realtor might even comment if your offer is too low. Understand your finanicng pic because banks will not be flexible in terms. Its black and white when it comes to the REO dept.