Saturday, January 1, 2011

How Much Should I Offer on this Foreclosure?

"How much should I plan to offer...I is a foreclosure! I am sure the bank is dying to get it off of their books."

I am asked this question quite often and 90% of the time, my answer is the same..."If there are multiple offers already on the table... submit your offer quickly and I'd recommended that you offer full price!" 

Let me explain...Banks seek out the help of experienced realtors and appraisers to determine the lowest fair-market value of a property. The property will be priced lower than other homes in the neighborhood, or lower than other condos in the building, because banks are not in the business to sell real estate. If the property needs repairs, the bank will lower the sale price even more, because the costs to make repairs are deducted. If the bank is also looking at other offers in addition to yours, go ahead and make a full-priced offer, you WILL still get a good deal!

If there are no other offers, (you can ask your realtor to gather this information) still go in with a strong offer. I had a property listed with a $200,000 sales price. An agent submitted an offer for their client of $140,000. The bank would not even entertain the offer...the bank didn't even counter! 15% below asking price is a good starting point for submitting offers...if there are no multiple offers. Again, even if you end up paying full price, you still will get a great deal and have instant equity.

If you submit an offer and at the same time, other offers are coming in, you'll be asked to submit a "Highest & Best" offer. This is when you decide how much the property is truly worth to you...offer your maximum purchase price. If your offer is the highest, you win!

One more doesn't matter if you are planning to pay in cash or financing. Although it would seem that a cash offer is better, banks will still take the highest offer presented. On your offer, you'll also want to have a short time frame for closing to take place. 30 days is a good number.

There's still more to learn, so call me at 888.360.SAND for additional advice. In 2010, I sold nearly 100 bank-owned properties. I am an authorized Listing Agent for Fannie Mae HomePath Properties, as well. I look forward to your questions and to helping you find a great deal!

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