Hello,
so I have an offer in on a foreclosed 4/2 sfh that is listed on mls for 69k. It was listed for 79k 3 weeks ago, but a new agent took over the listing and dropped the price. The home has been listed for about 260 days. I have had the property inspected and it needs only cosmetic work, approximately 2k worth.
I originally put in an offer for 55k with 25% dp and asked for seller paid closing costs. The bank countered at 66k with 2k in closing costs.
I have the funds to put down 25%, good credit (780 mid score), but I’m not sure the counter from the bank is reasonable. There aren’t any other offers on this property. I already have a lease agreement on the property that will cash flow me about $300 per month. Should I just take the banks offer, or counter at say 62k with seller paid closing costs?
This is my 1st investment property so I want to get a deal done, but my nerves are settling in. Please let me know your thoughts. Thank you.
Counter back at whatever price you feel is reasonable and tell them in detail why this is the best offer you can make. If they don’t take it tell them thank you and move on but to call you if they really want to sell it. Making offers is not only making the offer price but why you make that offer amount. If you give them enough reason to take your offer you will likely get it accepted.
Good luck,
donrock
What it’s listed for and what the bank will now take is interesting but irrelevant. A guide to what they might accept will come from the neighborhood comps. You’ve given nothing to suggest that comparable REO’s aren’t selling for $45k or $30k. Whatever the number, this ammunition will help you decide what to pay and perhaps convince them to take your offer. I’ll add that in this falling market, my offers are always substantially lower than the comps.
Absent an all cash offer, terms are often more important the price. From the numbers you presented, the return on investment from any of the scenarios is not dramatically different. I suggest that instead of making up arbitrary numbers to offer, you set the minimum ROI you must make and back out the most you can pay (leaving a conservative pad). If the bank takes the deal, well great, if not, well great. Move on. My point is not to be arbitrary, as your post above indicates to me.
Remember that this is just numbers. You don’t have to get the deal done. Keep your nerves out of it.
By the way, you didn’t lease a house you don’t yet own, did you?
thanks for the info.
And no, I haven’t leased the home yet, I just have a list of potential leases .
I’ll be more specific in the roi calculations and come up with a firm counter offer. Thanks.
The lender needs to see the CMA or an appraisal on the property, I know there will be someone out there telling “don’t waste your time/$$$,” but it’s NEVER a waste of your time/$$$ when you’re making $$$… I am telling u lenders are becoming more and more restrictive in their lending practices. I agree show the lender why they MUST sell U the property for $55K not $66 plus $2K … NOT!!!
Do u know how much “meat u have on the bone?” In otherwords, this is my way of saying "how much equity (real equity) do u have in this prop? U should ALWAYS know your PROFIT at your PURCHASE!!! Never forget this principle!!! Never get “emotionally” attached to a prop… This is a profession…
For example, if your nice prop. was appraised at: $100K you should not offer more than $50K… (REO), however, in your case you offered the lender $55K and they countered with $66K… I know without a doubt there is plenty of room in this deal!!! But, again, you “do not” have the “hard” numbers (i.e., CMA or appraisal report)… U need some more evidence to make your case to the lender, so let’s get it done…
Also, keep in mind the lender has “exhausted” ALL their cost on this prop… DOM: 260 … this is nearly a year on the market… The lender should be “giving” you the prop. for so small amount… This prop. must be in a depressing neighborhood, needs major work, etc…
Also, you may need to hire a GC (general contractor) to survey the prop. for minor/major costs… I think u mentioned someone already inspected the prop? Do not go off the words of an inspector, he/she are not “GC.”… they are “inspectors.”
Do your “due diligence” before u make your next offer to the lender, because u don’t want to appear like you’re “incompetent.” Remember, you’re a PROFESSIONAL, so perform like one!!! Shalom…
