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Getting ready to make an offer on a banked owned residential property. Any insight as to how to determine the amount I should offer? What is the typical strategy from the bank’s perspective? Do they follow any set formula relative to the amount they lost on the default? Any way to find out the amount of bad debt? Just trying to get some leverage here before I make an offer and begin negotiations. Thanks!
Lenders know clearly the market value of the property which they are selling. If you offer too much below that, you will be ignored. Prior to listing these properties for sale, lenders hire real estate agents to provide them a market value, based upon evidence of similar recent sales.
It has NOTHING to do with how much of a loss the lender incurred.
If you do not offer reasonably close to market value, the lender will simply wait for a better offer to come along.
Ignore what the bank thinks. You will never really be able to figure that out anyway. A lot of foreclosures in my area sell for more than they are worth simply because buyers perceive they are getting a good deal when they are not.
Make an offer you are happy with and feel you are getting a good price. If they sell to someone else for more than it is worth to you then who cares. If they turn you down and it remains on the market- wait a week and make the same offer again. Repeat until they sell to someone else or sell to you. Banks to not get tired of repeat offers although the agent might.
Research the banks history of REO sales and you might just figure out their formula. Listing as many factors as possible why they should sell it to you at a steep discount is important but if it is a large bank it will ultimately come down to a formula they have already calculated.
Public records will definitely show you what the bank was owed at the foreclosure auction but in this market that is no indication of what house is worth or what they will accept. Many banks are keeping these properties on their books until they recieve government bailout funds. It is padding their assets if they have a $200K house listed as a $500K asset.
Patience and perseverance. Takes a long time and bank doesn’t always act in its own best interest.