With all the preforclosure buzz going on, is anyone getting any significant deals from REO’s? What is the usual discount the bank will take back on an REO or is it a case by case scenario? I’m guessing they are so far into it at that point that 95% would be the lowest.
It really depends on your market and the bank. Every asset manager prices the home differently. But you can certainly find homes for 20-50% off FMV.
Don’t expect much discount in hot areas. Go for developing areas, not the run down ones.
I prefer to work with REOs, you don’t hurt anyones feelings if you offer to low. And there are tons of them out there.
Thanks for the response. I just figured with all the pre-forclosures out there that there has to be a way to tap these REO’s as well. Do the same bank mitigators negotiate these or is it a separate department of the bank?
I think each bank is different. Plus there are couple of factors that may have some immediate effect on just how low they will go;
How long has it sat on the market
How much inventory does the bank have to move
Our first REO purchase was originally listed at $49k. They had an offer of $38k but it fell through due to the buyer not able to get financing. We offered $31k cash with contingency of inspection and they accepted our offer. The house was on the market a couple months prior to that first offer that fell through. Previously the house was sold through regular means to the previous buyer for $82k. The tax assessement says they place a value of $82,500. Of course we don’t go by those but just gives an idea. I think the house is probably worth RV at $65-69k.
I live in Oregon, where things have slowed, but holding up well compared to some parts of the country. The banks basically want retail. I have seen homes listed for 60K more than was owed to the bank (I checked trust deeds). I’ve also seen them counter with full price.
It seems like they sit, and eventually sell at something like a 10% discount.
In the areas where there’s tons of REO’s- sometimes banks still don’t want to negotiate. But there are so many REO’s, and it’s not much effort to put out lots of offers, and see which one is willing to reduce their price.
They may be hard to resell, but great if you can fix and hold for the long term.
REO is totally different division than short sale. So when it reaches REO division, it’s brand new to them on their books, and that’s why they start off hopeful of a good price for them.
Charlotte, NC is a fairly “Hot” area in respect to other areas of the country and we just picked up an REO at 80% of FMV. It only took 3 days from offer to approval.
Nowadays, the banks are under audit so no telling what theyd except… as long as you can fund the deal with HM loan or dbl closing, I would be starting much lower especially on ugly houses ( house needing repairs ) be sure to work BPO agent to influence the BPO, and call BPO agent to find out what he arrived at. then when you approach the lender, i hear 82 percent of BPO is what there looking for… Knowing this I would be starting lower, how much lower is dependant on equity, and exit strategy… Hope this helps someone…
Realtor