Strategies for REOs
November 8, 2010 10:23 AM Subscribe
Is there a recommended strategy for offering on an REO/foreclosure?
We've found a house we like in San Francisco. It's been listed as an REO for about a week. There are no other offers in yet and the listing agent says there's been "some interest" but didn't suggest that demand has been extreme. It was listed as a short sale in March for $580,000 and then foreclosed and is now listed by an agent as an REO for $545,000. Comparable are still being developed by our agent but it seems like a good price, given everything else we've seen in the neighborhood. No disclosures and we'd still need to do all our own inspections. We've toured it and on the surface it seems to be in good shape. Do banks entertain offers below list? Is it crazy to even consider that? Are there strategies to consider in our offer? Obviously we are in discussions with our agent who we really like and trust and are speaking with other professionals as well.
We've found a house we like in San Francisco. It's been listed as an REO for about a week. There are no other offers in yet and the listing agent says there's been "some interest" but didn't suggest that demand has been extreme. It was listed as a short sale in March for $580,000 and then foreclosed and is now listed by an agent as an REO for $545,000. Comparable are still being developed by our agent but it seems like a good price, given everything else we've seen in the neighborhood. No disclosures and we'd still need to do all our own inspections. We've toured it and on the surface it seems to be in good shape. Do banks entertain offers below list? Is it crazy to even consider that? Are there strategies to consider in our offer? Obviously we are in discussions with our agent who we really like and trust and are speaking with other professionals as well.
Most banks will not take offers with contingencies in them. (Most common contingencies are: getting financing; house passing inspection; current dwelling being sold in time.) If you are serious and want to get an inspection done, try to arrange it before you make an offer, or specifically ask them if they would take such a contingency before including it in an offer. I bought my first house at auction, and the custodians were happy to allow me and the inspector in the house to do our thing. If the bank WON'T accept a contingency, then you have to get the inspection done before submitting an offer or otherwise you'll be fucked if you want to pull out of the deal.
posted by wwartorff at 2:19 PM on November 8, 2010
posted by wwartorff at 2:19 PM on November 8, 2010
Most banks will not take offers with contingencies in them.
I've found this not to be the case. I recently put in an offer on an REO in the Bay Area with both a financing and inspection contingency; the offer has been accepted, and we're on our way to closing. Previously, I wrote up an offer on another REO with contingencies; I backed out of that one after seeing the inspection report that a previous potential buyer had ordered. Obviously, their offer with contingencies was initally accepted, because they were able to order an inspection and then back out.
Do banks entertain offers below list? Is it crazy to even consider that?
It's not crazy. Just like you want a good deal, they want a good deal; depending on circumstances - say, if nobody else is making actual offers - a below-list offer may be a good deal for them. Just keep in mind that since it's a bank, their motivations may be different than a normal seller. They want their balance sheet to look good, so are motivated to sell; but not selling this one property quickly won't kill them, so they might be able to dig in their heels on price.
I just looked up a bunch of REO properties I've been tracking the last few months, and here are 3 REOs in the East Bay that all sold below listing price:
25% under
14% under
3% under
Based on the date of your previous question, it looks like you've just started the process. You found a good house in less than a month? If you're not in a hurry, relax and offer less than the listing price. If you get it, great! If not, there's a good chance that a better one at a better price will come available sometime in the next few months.
posted by mistersix at 3:48 PM on November 12, 2010
I've found this not to be the case. I recently put in an offer on an REO in the Bay Area with both a financing and inspection contingency; the offer has been accepted, and we're on our way to closing. Previously, I wrote up an offer on another REO with contingencies; I backed out of that one after seeing the inspection report that a previous potential buyer had ordered. Obviously, their offer with contingencies was initally accepted, because they were able to order an inspection and then back out.
Do banks entertain offers below list? Is it crazy to even consider that?
It's not crazy. Just like you want a good deal, they want a good deal; depending on circumstances - say, if nobody else is making actual offers - a below-list offer may be a good deal for them. Just keep in mind that since it's a bank, their motivations may be different than a normal seller. They want their balance sheet to look good, so are motivated to sell; but not selling this one property quickly won't kill them, so they might be able to dig in their heels on price.
I just looked up a bunch of REO properties I've been tracking the last few months, and here are 3 REOs in the East Bay that all sold below listing price:
25% under
14% under
3% under
Based on the date of your previous question, it looks like you've just started the process. You found a good house in less than a month? If you're not in a hurry, relax and offer less than the listing price. If you get it, great! If not, there's a good chance that a better one at a better price will come available sometime in the next few months.
posted by mistersix at 3:48 PM on November 12, 2010
Response by poster: Yes, we made an offer on a house a couple days ago and are waiting to hear back from the bank. The offer is contingent on inspections and financing and that seemed to be quite normal according to our agent. Anyway, we offered list. We'll see.
posted by otherwordlyglow at 4:17 PM on November 12, 2010
posted by otherwordlyglow at 4:17 PM on November 12, 2010
This thread is closed to new comments.
posted by otherwordlyglow at 10:24 AM on November 8, 2010