Friday, September 4, 2009

What do you offer on a foreclosed property?

A client asked: In a situation like this, (so many days on the market) does one bid lower?? at asking price?? higher??

ANSWER: There is no easy answer regarding what you offer. You just have to look at all the angles.

#1 – What is it worth to you to purchase it? Without looking at the price as a challenge to get the lowest price only for the sake of getting the lowest price, (and I don’t think you do this by the way), look at it to see what it is worth to you. What figure would you be happy with that you paid for the home and walked away with it.

#2 – Let’s look at the sales in the area – this is what the bank is going to do – and they are not going to negotiate much lower than the price in the MLS as they have already gone through all the process of putting this through foreclosure and back on the market. As long as it does not sell they will continue to reduce the price but at some point it will reach the investor’s interest and the “all cash” offers will come in and you won’t have an option to bid on it.

#3 – To offer too much will put you in jeopardy with your lender. If the FMV is not as high as you offer then you have to come up with the difference of your offer and their appraisal – which is the amount they will lend on the property. Not a good idea either.

Once you see this property then we will pull all the comps in the area to see what is a realistic offer for you and analyze that price per the above criteria.

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