Making an offer on a house-need advice

forgop · 02-03-2010, 05:44 PM

I currently will have my house paid off in the next week and want to upgrade because we're getting a bit cramped in our current home. Obviously it's a buyers market and I can take the plunge to pay cash for the new house without having to sell our current home first.

I'm looking for something in the range of $275k-$300k. I found a really nice house listed for $299,900, so what would be a decent starting point? This house in particular was built in 2007 and has never had anyone living in it. It is now bank owned I believe and feel like they may obviously be motivated to sell it. Do you think $239,920(80%) be an unreasonable starting point for someone that has the capability to wire the money to them the same day? (Obviously, I'd go through inspections and such before doing it).

I know if I got it for that, it would be a STEAL, but you just never know.

Commander Quan · 02-03-2010, 05:50 PM

That sounds low to me but make them an offer and see what they say. Do you know how long the bank has owned the property? And what they paid for it? If it's a foreclosure check with your county auditor to see how much they "bought" it for at sheriffs sale. That will give you a starting point.

forgop · 02-03-2010, 05:58 PM

Quote:

Originally Posted by Commander Quan

That sounds low to me but make them an offer and see what they say. Do you know how long the bank has owned the property? And what they paid for it? If it's a foreclosure check with your county auditor to see how much they "bought" it for at sheriffs sale. That will give you a starting point.

Ok, thanks for the advice. I know the circumstances of this particular house makes it a bit more unusual that buying a pre-owned or a new home in terms of possibly getting a better deal.

One bit of info my friend told me is that when they were building it, there was some mold issues due to rain. His understanding was they gutted the thing and had to start all over. I would have probably no fewer than 2 different inspectors look the house over and determine there are no potential mold issues just to be safe. The basement is unfinished which is fine because I would be content doing the flooring, electrical, and drywall myself.

BigCat · 02-03-2010, 06:09 PM

What's the house worth in a non-distressed market? If its around $300,000, then definitely come in low with the bank. But if its more like $500,000, the price the bank has it set at is probably close to as low as the bank is willing to go at this point, unless its been on the market for some time. I bought a house recently and noticed that bank owned properties almost always went for asking price because they were already significantly discounted. You should probably talk to a realtor in the area. He or she will be able to help you out. On the house we bought, our realtor actually called the seller's agent and ask if what we were willing to offer was worth putting on paper based on the asking price. Turns out it was and we got it for a lot less than the asking price. The point is, consult with a pro in the area and you'll get plenty of info.

02-03-2010, 06:29 PM

Can't answer your question without knowing what the house is appraised for or assessed at, at the minimum what similar properties in the neigborhood have recently sold for. It may be a half million dollar house that the bank has 300,000 in, if that's the case negotiation isn't going to get you far.

However, there IS a reason the house hasn't sold in 3 years. Maybe it's the mold, maybe something else. In most states a seller is required to disclose any material defects to a buyer, so they have to tell you about any major problems that exist.

MikeyC · 02-03-2010, 07:42 PM

Quote:

Originally Posted by BigCat

What's the house worth in a non-distressed market? If its around $300,000, then definitely come in low with the bank. But if its more like $500,000, the price the bank has it set at is probably close to as low as the bank is willing to go at this point, unless its been on the market for some time. I bought a house recently and noticed that bank owned properties almost always went for asking price because they were already significantly discounted. You should probably talk to a realtor in the area. He or she will be able to help you out. On the house we bought, our realtor actually called the seller's agent and ask if what we were willing to offer was worth putting on paper based on the asking price. Turns out it was and we got it for a lot less than the asking price. The point is, consult with a pro in the area and you'll get plenty of info.

If you have questions with a transaction this big then wouldn't you feel better about it if you involved a professional?

chippewastud79 · 02-03-2010, 05:54 PM

80% sounds like a great offer to me, particularly for a starting point. I wouldn't expect they will accept that offer but it won't turn them off completely. I would suggest a nice round number like $240,000 for the actual offer with 3% closing costs from the seller. Assuming it is still under the construction loan from the time it was built you would expect them to be wanting to get it off their books ASAP.

Don't expect a cash offer to entice anyone any more than a well qualified pre-approval letter would. Unless you were buying it sans realtor, the price paid is still the same and the bottom line for the seller is the same.

Don't run an inspection until you have an accepted offer on the property because there are still more negotiations to be made if there are any problems with the home that could potentially lower the price as well after concessions are asked for.

Just my

Sorry, obviously seller is the bank, which is likely the one who issued the construction loan. Could be significantly lower than the price asking, but it may be very near the price they are asking which could make negotiations tougher. You'll have to see if the bank is even offering concessions for issues or if they are willing to negotiate closing costs too.

Best of luck with the upcoming home purchase.

chachee52 · 02-03-2010, 08:47 PM

Having just bought a house for dirt cheap a year and a half ago, I will give my two cents.
If the bank owns it than they are going to price it at a point where they are going to sell it without loosing money if they can help it. my fiance also works at a bank and knows that the banks don't budge too much. I am definitely in agreement with Resipsa and Bigcat about knowing what the other houses in the area are selling for. Appraisal from what I saw when I was looking is just a minor thing to look at. It's not a tell all of what it's worth in the market.

colimo · 02-04-2010, 12:26 AM

a number of thoughts and suggestions....if it is bank owned, you can search the foreclosure records to find out what they bid at the foreclosure sale to determine what they have in it....

you can also search what similar houses in the neighborhood sold for on such sites as realtor.com...

you may also want to use a broker who will sign a buyers agent agreement, even though her commission is actually paid by the seller....

the 80% may not be bad, but depending on the neighborhood values and what was foreclosed could actually be high...

good luck

02-04-2010, 11:25 AM

Im not a realtor but I live fairly close to your area (south burbs of CHI). Offer what you feel is appropriate. I sold my house 4 months ago with a invested cost of 315 at 229. IMO there are a TON of homes in our market as a whole that are banked owned. MORE are coming. I'm sitting on the side lines waiting to put down half or more on our next home. IMO a proffesional isn't always the best advice right now due to the fact that I used a 25 year vet with a huge agency and they couldn't even tell me what the "current" market is doing on a day to day basis. If you don't get this home there are thousands out there that will suit your needs. Banks may not like your offer but your in the driver seat with great amounts of liquidity at hand. IL and IN have been hit hard by the current recesion. Wether the banks dislike yours and others offers right now is a moot point. Eventually there going to have to get rid of these millions of toxic assests and get back to making money. I recently found a dream home for us right now that was a builder new from 08 and listed at 909,000 with the bank taking offers at 415 and still no one is buyning this property at the 90 day mark. There are very few in your position right now IMO make the most of it.
Justin

02-04-2010, 12:56 PM

I've been selling real estate for over 20 years so let me throw a few thoughts at you. Some things will be different because of area (I'm in the DC area) but not by much.
If you check the tax records of the property it will show what the bank paid for it at foreclosure. They have to buy it back for the total amount due on the note at the time. So it's just not what the mortgage balance was, it will include late fees, interest to date of foreclosure and the legal fees incurred to foreclose. In our area we are seeing foreclosures that the bank has 450,000 in coming bank on the market in the low 200's. They are typically selling quickly at those prices and the banks are usually not dealing off of those numbers. They will keep those prices for at least a month before they reduce if it doesn't sell quick. We have found that most banks are not dealing much off of there prices but it's still worth a try. A lot depends on the person at the bank handling the sale. Sometimes they get bonuses for getting things off the books, but sometimes they are very limited in what they can do because the bank has hired an independent appraisal and they can't move much off that price without justification.
Now about your specific case: Be very careful, foreclosures are a dime a dozen so don't overpay. If it's been on the market for a long time and hasn't sold, and on top of that may have mold or other issues it has to be a fabulous deal or you need to be able to walk away. Disclosures are a scary part of our business, even if you've corrected it you may have to disclose it when you go to sell it. I'll tell you what I tell my buyers; yes it could be a great project and maybe it's a deal but just a deal is not enough it has to be a great deal. And in your case the only way to know is to get educated on your market see other houses, see what has recently sold, get a professional realtors opinion on value after you do all the work on it. It should have close to 100,000 of equity in it after you've bought it and spent money to fix it up, to make it worthwhile.
Sorry for the long post and feel free to message me or ask any questions you have. I do this full time and sell a ton of houses and answer questions all the time.

Rabidsquirrel · 02-04-2010, 03:59 PM

Good luck. We waited 5 months to buy a short sale house, and we still didn't get a response from the bank. We found another house, made an offer on Friday and got the thumbs up on Tuesday.

forgop · 02-19-2010, 06:38 PM

Decided to make an offer on this instead:

http://www.realtor.com/realestateand...239_1113117604

House was originally listed for $385k less than 2 years ago.

Rabidsquirrel · 02-19-2010, 08:04 PM

Holy **** that's beautiful. Easily over a million where I live, even in todays market.

forgop · 02-19-2010, 08:18 PM

Quote:

Originally Posted by Rabidsquirrel

Holy **** that's beautiful. Easily over a million where I live, even in todays market.

Our 2nd offer today was $279k with their original counter at $290k. I think it will be really sweet to sit on the deck/porch in the evenings to look over the pond and have a nice cigar.

MikeyC · 02-20-2010, 08:56 AM

Quote:

Originally Posted by forgop

Our 2nd offer today was $279k with their original counter at $290k. I think it will be really sweet to sit on the deck/porch in the evenings to look over the pond and have a nice cigar.

Holy crud! Where I live a house like that would sell around $1M more or less depending on location.

forgop · 02-20-2010, 11:52 AM

They took my offer. Woo hoo!!!

XTRazzer · 02-20-2010, 03:07 PM

Congratulations

JE3146 · 02-20-2010, 03:29 PM

That was a steal for that place... holy crap..

BengalMan · 02-20-2010, 05:07 PM

Beautiful home Duane! Let me know when the first herf is to break it in, I'd be glad to come over and help celebrate, lol.

Looks like things are going great with you and the family.

02-03-2010, 05:44 PM	#1
forgop Not a puffer Join Date: Oct 2008 First Name: Duane Location: Indianapolis, IN Posts: 2,869 Trading: (40)	Making an offer on a house-need advice I currently will have my house paid off in the next week and want to upgrade because we're getting a bit cramped in our current home. Obviously it's a buyers market and I can take the plunge to pay cash for the new house without having to sell our current home first. I'm looking for something in the range of $275k-$300k. I found a really nice house listed for $299,900, so what would be a decent starting point? This house in particular was built in 2007 and has never had anyone living in it. It is now bank owned I believe and feel like they may obviously be motivated to sell it. Do you think $239,920(80%) be an unreasonable starting point for someone that has the capability to wire the money to them the same day? (Obviously, I'd go through inspections and such before doing it). I know if I got it for that, it would be a STEAL, but you just never know.

02-03-2010, 05:50 PM	#2
Commander Quan Feeling at Home Join Date: Oct 2008 First Name: Derrick Location: Canton, OH Posts: 966 Trading: (4)	Re: Making an offer on a house-need advice That sounds low to me but make them an offer and see what they say. Do you know how long the bank has owned the property? And what they paid for it? If it's a foreclosure check with your county auditor to see how much they "bought" it for at sheriffs sale. That will give you a starting point.

02-03-2010, 06:09 PM	#4
BigCat My back is now unwatched. Join Date: Apr 2009 First Name: Colin Location: Metro Detroit Posts: 723 Trading: (5)	Re: Making an offer on a house-need advice What's the house worth in a non-distressed market? If its around $300,000, then definitely come in low with the bank. But if its more like $500,000, the price the bank has it set at is probably close to as low as the bank is willing to go at this point, unless its been on the market for some time. I bought a house recently and noticed that bank owned properties almost always went for asking price because they were already significantly discounted. You should probably talk to a realtor in the area. He or she will be able to help you out. On the house we bought, our realtor actually called the seller's agent and ask if what we were willing to offer was worth putting on paper based on the asking price. Turns out it was and we got it for a lot less than the asking price. The point is, consult with a pro in the area and you'll get plenty of info.

02-03-2010, 06:29 PM	#5
Resipsa Guest Posts: n/a	Re: Making an offer on a house-need advice Can't answer your question without knowing what the house is appraised for or assessed at, at the minimum what similar properties in the neigborhood have recently sold for. It may be a half million dollar house that the bank has 300,000 in, if that's the case negotiation isn't going to get you far. However, there IS a reason the house hasn't sold in 3 years. Maybe it's the mold, maybe something else. In most states a seller is required to disclose any material defects to a buyer, so they have to tell you about any major problems that exist.

02-03-2010, 05:54 PM	#7
chippewastud79 Fatter than you! Join Date: Oct 2008 First Name: Larry Location: A little place called home. Posts: 5,397 Trading: (44)	Re: Making an offer on a house-need advice 80% sounds like a great offer to me, particularly for a starting point. I wouldn't expect they will accept that offer but it won't turn them off completely. I would suggest a nice round number like $240,000 for the actual offer with 3% closing costs from the seller. Assuming it is still under the construction loan from the time it was built you would expect them to be wanting to get it off their books ASAP. Don't expect a cash offer to entice anyone any more than a well qualified pre-approval letter would. Unless you were buying it sans realtor, the price paid is still the same and the bottom line for the seller is the same. Don't run an inspection until you have an accepted offer on the property because there are still more negotiations to be made if there are any problems with the home that could potentially lower the price as well after concessions are asked for. Just my Sorry, obviously seller is the bank, which is likely the one who issued the construction loan. Could be significantly lower than the price asking, but it may be very near the price they are asking which could make negotiations tougher. You'll have to see if the bank is even offering concessions for issues or if they are willing to negotiate closing costs too. Best of luck with the upcoming home purchase. __________________ If we weren't supposed to eat animals, then how come they're made of meat? You can never have too many cigars, they are like an investment in good times.

02-03-2010, 08:47 PM	#8
chachee52 Adjusting to the Life Join Date: Dec 2009 First Name: Todd Location: Tyngsboro, MA Posts: 399 Trading: (2)	Re: Making an offer on a house-need advice Having just bought a house for dirt cheap a year and a half ago, I will give my two cents. If the bank owns it than they are going to price it at a point where they are going to sell it without loosing money if they can help it. my fiance also works at a bank and knows that the banks don't budge too much. I am definitely in agreement with Resipsa and Bigcat about knowing what the other houses in the area are selling for. Appraisal from what I saw when I was looking is just a minor thing to look at. It's not a tell all of what it's worth in the market. __________________

02-04-2010, 12:26 AM	#9
colimo friend of Brother Maynard Join Date: Mar 2009 First Name: doug Location: centennial, colorado Posts: 1,322 Trading: (41)	Re: Making an offer on a house-need advice a number of thoughts and suggestions....if it is bank owned, you can search the foreclosure records to find out what they bid at the foreclosure sale to determine what they have in it.... you can also search what similar houses in the neighborhood sold for on such sites as realtor.com... you may also want to use a broker who will sign a buyers agent agreement, even though her commission is actually paid by the seller.... the 80% may not be bad, but depending on the neighborhood values and what was foreclosed could actually be high... good luck __________________ Life is too short for cheap beer, cheap liguor and bad cigars...gimme a guinness, glenlivet and a good cigar on a golf course and its heaven on earth!!

02-04-2010, 11:25 AM	#10
Jfire Guest Posts: n/a	Re: Making an offer on a house-need advice Im not a realtor but I live fairly close to your area (south burbs of CHI). Offer what you feel is appropriate. I sold my house 4 months ago with a invested cost of 315 at 229. IMO there are a TON of homes in our market as a whole that are banked owned. MORE are coming. I'm sitting on the side lines waiting to put down half or more on our next home. IMO a proffesional isn't always the best advice right now due to the fact that I used a 25 year vet with a huge agency and they couldn't even tell me what the "current" market is doing on a day to day basis. If you don't get this home there are thousands out there that will suit your needs. Banks may not like your offer but your in the driver seat with great amounts of liquidity at hand. IL and IN have been hit hard by the current recesion. Wether the banks dislike yours and others offers right now is a moot point. Eventually there going to have to get rid of these millions of toxic assests and get back to making money. I recently found a dream home for us right now that was a builder new from 08 and listed at 909,000 with the bank taking offers at 415 and still no one is buyning this property at the 90 day mark. There are very few in your position right now IMO make the most of it. Justin

02-04-2010, 12:56 PM	#11
MarioF Guest Posts: n/a	Re: Making an offer on a house-need advice I've been selling real estate for over 20 years so let me throw a few thoughts at you. Some things will be different because of area (I'm in the DC area) but not by much. If you check the tax records of the property it will show what the bank paid for it at foreclosure. They have to buy it back for the total amount due on the note at the time. So it's just not what the mortgage balance was, it will include late fees, interest to date of foreclosure and the legal fees incurred to foreclose. In our area we are seeing foreclosures that the bank has 450,000 in coming bank on the market in the low 200's. They are typically selling quickly at those prices and the banks are usually not dealing off of those numbers. They will keep those prices for at least a month before they reduce if it doesn't sell quick. We have found that most banks are not dealing much off of there prices but it's still worth a try. A lot depends on the person at the bank handling the sale. Sometimes they get bonuses for getting things off the books, but sometimes they are very limited in what they can do because the bank has hired an independent appraisal and they can't move much off that price without justification. Now about your specific case: Be very careful, foreclosures are a dime a dozen so don't overpay. If it's been on the market for a long time and hasn't sold, and on top of that may have mold or other issues it has to be a fabulous deal or you need to be able to walk away. Disclosures are a scary part of our business, even if you've corrected it you may have to disclose it when you go to sell it. I'll tell you what I tell my buyers; yes it could be a great project and maybe it's a deal but just a deal is not enough it has to be a great deal. And in your case the only way to know is to get educated on your market see other houses, see what has recently sold, get a professional realtors opinion on value after you do all the work on it. It should have close to 100,000 of equity in it after you've bought it and spent money to fix it up, to make it worthwhile. Sorry for the long post and feel free to message me or ask any questions you have. I do this full time and sell a ton of houses and answer questions all the time.

02-04-2010, 03:59 PM	#12
Rabidsquirrel Moderately Confused Join Date: Oct 2008 Location: Pennsylvania, US Posts: 576 Trading: (5)	Re: Making an offer on a house-need advice Good luck. We waited 5 months to buy a short sale house, and we still didn't get a response from the bank. We found another house, made an offer on Friday and got the thumbs up on Tuesday.

02-19-2010, 06:38 PM	#13
forgop Not a puffer Join Date: Oct 2008 First Name: Duane Location: Indianapolis, IN Posts: 2,869 Trading: (40)	Re: Making an offer on a house-need advice Decided to make an offer on this instead: http://www.realtor.com/realestateand...239_1113117604 House was originally listed for $385k less than 2 years ago.

02-19-2010, 08:04 PM	#14
Rabidsquirrel Moderately Confused Join Date: Oct 2008 Location: Pennsylvania, US Posts: 576 Trading: (5)	Re: Making an offer on a house-need advice Holy **** that's beautiful. Easily over a million where I live, even in todays market.

02-20-2010, 11:52 AM	#17
forgop Not a puffer Join Date: Oct 2008 First Name: Duane Location: Indianapolis, IN Posts: 2,869 Trading: (40)	Re: Making an offer on a house-need advice They took my offer. Woo hoo!!!

02-20-2010, 03:07 PM	#18
XTRazzer Still Watching My Back Join Date: Apr 2009 Posts: 131 Trading: (1)	Re: Making an offer on a house-need advice Congratulations

02-20-2010, 03:29 PM	#19
JE3146 Jordan #2 Join Date: Oct 2008 First Name: Jordan Location: Tigard, OR Posts: 2,115 Trading: (26)	Re: Making an offer on a house-need advice That was a steal for that place... holy crap..

02-20-2010, 05:07 PM	#20
BengalMan Have My Own Room Join Date: Oct 2008 First Name: Ian Location: Cincinnati, OH Posts: 1,280 Trading: (10)	Re: Making an offer on a house-need advice Beautiful home Duane! Let me know when the first herf is to break it in, I'd be glad to come over and help celebrate, lol. Looks like things are going great with you and the family.