good deal or not?

I have a question on an REO property. Bank has owned it for 10 days and has listed it with a realtor. The details of the house are as follows: comps- 120k
ARV- 115k (quick sale)
asking- 90k
repairs- 10k (all bids come in at 7500, but we will call it 10)

my question is will a bank drop the price low enough on a property for this to become a deal, if so what should be the first offer on this ten year old house.

My plan is to flip this house, and if it doesn’t sell in four to six months I will move into it because I currently do not own a house, average DOM for the neighborhood is 120 days, asking price of 115k would be the lowest in the neighborhood. Three other houses are for sale in the neighborhoodat 119k, 122.5k, and 126k. All houses are 3/2.

Based on your repair estimates, this property appears to be a cosmetic fixer. Banks sometimes do the quick and easy repairs themselves instead of discounting the price. They know what easy repairs are when they see them. I wouldn’t expect this property to become a huge bargain anytime soon.

Don’t forget:
-carrying costs (taxes, insurance, debt service, utilities)
-closing costs
-realtor costs
Then if there’s anything left, you only keep 60%.

offer 70k if they take it then great if not and you really want the house and are prepeared to move in if its a breakeven then congrats on your new home! When it comes to your own home the numbers to me dont matter. If you can afford it go for it, if you can get a great deal do the same. Good luck

So, if I could get it for 70k then it turns into a good deal?
In your experience would a bank drop it that much, the house is in total cosmetic disarray, I have never seen walls and carpet in this bad of shape (they are dirty but not torn up), the listing realtor won’t even walk in it because it smells so bad.
It is not that I want to live there it is just that in my position I would if I had to.

It’s a good deal if after every dollar you spend, there is enough after tax profit to satisfy you. Just make sure you include EVERY dollar in your calculations before hand. For me personally, I wouldn’t be satisfied with this property unless the price was 50k or lower.

Cosemtic fixers don’t usually have a huge discount. It sounds like the bank has already discounted the price enough for someone to renovate it and live in it while still being at or under market value. They are well aware of the fact that the property is only a few thousand dollars away from where it needs to be. If the floors and walls are in bad shape, you can almost certainly expect a bank to discount the property for the price to repair the walls and replace the carpet. No more, no less.

If I were you, I’d make a low ball offer and move on to another property without waiting to hear their response. If you plan on living in this, that’s a whole other story.

Hi,

More input. This deal is extremely like my very first reo deal…which was my first deal.
All of the other costs…that DannyTheGreat refers to will probably come to equal about 10% of the ARV. So just add another 12K on to your costs. So 90+10+12 = Cost Basis of $112K.

So 90 is cutting it too close. This is a great time to make a low ball offer if you can close by the end of the year. Also, you can reduce your cash out of pocket as well. Follow closely what happened with my first deal by accident.

These were my estimates going in. But Since it was a quick turnaround, I thought I could make less and still be ok.
ARV = 130K
Repairs 20K
All other Costs = $13K
Maximum Allowable Offer = 71K. to make $26K in Profit.

How the deal really shook out.
ARV…actual Sold Price $126.5K
Repairs = $20.5K
Purchasing, Selling and Carrying Costs = $11.929K
Net Profit of $11921.

Here is the good part. My offer to the bank was $82,500.00, They said no, but then came back and said offer us $87,500. and we will give you $5K back toward closing costs. They were more concerned about the “actual sale price”, and not necessarily the net that they would receive.

With the average days on market that you mentioned, I think I would only go up to $70k…maybe even start at 64.7K to open the discussion.

Hope this helps.

I have a question on an REO property. Bank has owned it for 10 days and has listed it with a realtor. The details of the house are as follows: comps- 120k
ARV- 115k (quick sale)
asking- 90k
repairs- 10k (all bids come in at 7500, but we will call it 10)