Hello,
I’m working on purchasing a REO and wondered if there is a good way to negotiate with the bank. Their asking price is $30,000 and my offer was $18,000 cash. They came down to $27,000, but that is still way above where I need to be or what the market will hold. My realtor says, banks won’t listen to any justification…they just look at their bottom line. Is this true or is there a way we can negotiate a price?
Thanks so much for your help!
The bank does negotiate but not from an emotional point. Always appeal to the fact that they will not have to hold the property the next month. Say that will easily pay for the price reduction (even if it won’t)
good to meet you…
Some good advise above… Banks are just about numbers… There are ways to make those numbers support your offers… However dealing with a Selling agent trying to buy an REO is tough…
Good House Hunting
Michael
Thanks guys. I’m going to be persistent with my offer and see if they bite. Hopefully they will get the point the house isn’t worth what they are asking…hopefully. If not, there are more homes out there! I’ll let you know how it turns out.
Also keep in mind that the bank (banker) may or may not know the real condition of the property. They have hundreds (if not thousands) of homes in their inventory. They have probably not seen the property and rely on the real estate agents to do the work.
Understanding that real estate agents work on commission, and have little interest in selling discounted properties if possible:
Try to put the list of repairs needed, that you are assuming responsibility for, in the contract language, so that the banker is aware of exactly how much work the house needs when deciding if your offer is reasonable. Otherwise the agent will just send in a “lowball” offer that the bank will reject out of hand, because they don’t know the real condition of the property.
HI Chew,
Good info from the others so I won’t rehash.
Working with banks is tough. It was mentioned about the emotional factor and that banks look at numbers, which is all true.
This is a good reason to mix up your investing and get deals also from homeowners who do make emotional moves, who can sit across the table from you and like you and go with your fair proposals.
It’s easier to make connections this way and find out what it is the seller is looking for and simply make an offer to match their needs.
Dennis
Sometimes you have to go elsewhere and just keep watching that REO to see what happens. We tried for about 8 months to get one. The bank originally wanted double what we paid for it. They just started walking the price down over time. This house wasn’t on the MLS either. There was only a sign in the yard so less people knew about it.
The fact that they even countered is a really good sign. Most of the time they won’t even do that if you offer to low. The key is to have out a ton of offers at one time and never get your heart set on a property. I have done deals where I offer lower after the counter and tell them you didn’t really go down so I figured I would. This is sales and sales is numbers. Get out more offers and keep them going!
I always view any dealings with banks as icing on the cake.
Short sales, REOS etc. It’s so unsure and time consuming, but we still do them. If it works great, if not well I’m still working on my bread and butter deals with real homeowners- real people I can connect with.
Some of your best deals will be here, so should your main focus especially when you’re fairly new
Dennis