I’ve heard experts say to offer on an REO property .25 to .35 cents on the dollar… How do you calculate this amount for an offer? On what value is this calculation based on?
REO Buyer
That sounds extremely low for an REO. I would be shocked if you were successful buying at that price for an REO. Preforeclosure distressed mortgage debt is trading at 40-50 cents on the dollar in hard hit areas like Florida and Nevada. In better areas, distressed debt is trading at 50-60 cents on the dollar. Once the bank has gone to the trouble of foreclosing, it has eliminated a lot of risk and delay for the buyer, so REO properties trade for even more than distressed debt.
REO properties are generally listed, significantly lower than “regular” listings/Non REO. Therefore these are already being offered quite low so there is no incentive for the bank to take less. At least in the Los angeles area these properties have multiple offers and going quickly.
There are properties asking $300,000 and less that sold for over $500,000 a couple of years ago.
The bank is not going to take $100,000 for these no way.
depending how serious you are about the property you could submit a low ball offer (you don’t land deals if you don’t make offers and who knows maybe they will bite…plus it’s good practice…) if you’re pretty serious about aquiring it. work out the numbers that suit you and submit.