Need Input - Please

I have a contact at the local bank who sends me list of foreclosures.
This time she called and said that a property that I was interested in is appraised for $175k and asked if I am interested in putting an offer. I am going to see the property tomorrow to see what work is needed…The banker also told me that there is no realtor assigned yet and I will have to collect the key at the bank and look the house myself.

I am going to offer based on the (0.7)*ARV-Repairs-Carrying costs

I also know that there is a mortgage for $160k on the house in 2008 so I can guestimate the amount still owed to the bank.

So, my question to you guys is 1) what % of the left over mortgage does the bank takes? (20% disc or 25%) is there a magic number on this discount?
2) Since there is no realtor can I assume the discount of 6% right away?

Could you please post how can I take advantage of this situation of property not listed thru agent yet.

Thanks in advance for reading and posting.


The 6% fee is dropped with foreclosures, they’re a lot cheaper because of that, but most banks ask for the cash upfront, that’s why most people can’t do foreclosures. They just don’t have the cash.

Modified due to rules violation

frea - Thank you for your post. Can I ask the banker to show me thw appraisal?


On REO’s banks usually take a 20% discount.

What are you planning on doing with the property? Fix and flip, rental, or wholesale?

I, personally don’t see that much of a spread. Worth 175k and there was a mortgage of 160k in 2008?

I wouldn’t imagine that mortgage has been paid down that much. There’s probably a balance of 157k or so.

Well to make it worth your while deduct 20 percent off of 157k. You’re purchase would be 125k. Now you can make a little bit of money…hopefully.

Torojd, Thanks for your response… actually the house needs a very little bit of work of about 5k. I offered 118k and the bank rejected right off the bat… made a verbal offer at 11.0 in the morning and they called me back at 3.0pm… I said my offer is open just in case things change on their side…

My next steps on this property is … if the back comes back to me then I will offer full cash purchase…

I moved on and working on another such opportunity… will make an offer tomorrow…

Thanks all for reading…