If you just went across the board and offered 70% of the asking price of the reo’s, what percentage do you think you would have accepted. I am referring to a typical midwest market.
I southeastern MI probably 1 in 50…maybe :-[
The banks are pretty tough here and difficult to deal with. I have a theory about this. With all of the zero down loans (80/20) interest only etc which a very large percentage of homeowners have these days, they don’t have too much to loose if they can’t pay the mortgage. So they walk away from the house leaving the bank high and dry. Now add to that the fact that when the home was purchased or refinanced it was probably at an inflated value for over priced for the market.
Bad market+Bad Economy+Very high home inventory = home prices falling which leaves a bank with a loan on a home that could be as much as 25% over value after adding forclosure fees, marketing fees etc. To save face a bank prices at market value and holds on in hopes of finding a sucker out there. Surprisingly enough here in SE MI there are REO homes selling for at or near what the bank is asking for them. Shame on the buyers agent for not representing there client well. I can’t speak for condition on all homes but the large number I have seen are truly a mess requiring 15-20% of purchase price in rennovations just to get them to a saleable state. By that time your well over market value. Don’t get me wrong there are some diamonds in the rough but it takes time to find them.
It would be extremely foolish to simply offer 70% of asking price on REOs (or any other category of property). Most REOs are in distressed condition and often very overpriced as DKeith said. Therefore, offering 70% of asking price could easily result in you paying more than market value. If I asked $100,000 for a $50,000 house, would you be willing to pay $70,000??? I didn’t think so!
There is no substitute for doing the hard work required to find good deals. That means looking at property and making offers based on their actual market value. Of course, that assumes that you know the market value to start with.
Mike
TRUE DAT! 8) DO YOUR HOMEWORK!