Hello Gurus,
I am looking to buy one house which is lender owned. The house listing price $259K. This house was purchased by lender at auction with Trustee’s Deed at $231K on 1/17/2008.
What is the thumb rule of offer price for such lender owned properties. What are the typical price which lender usally agrees for lender owned properties.
I am looking for some insider information for lender’s perspective.
thanks.
Raj
This has been discussed before but to reiterate each deal stands on its own merits. There is no hard and fast formula. Decide what you would be willing to pay for this property and then make an offer.
With REO properties it usually takes some time before the bank is willing to take a substantial hit. What they usually do is to reduce the price a little each month. I have been most successful by continuing to follow a property that is of interest.
It takes some persistence and the ability to act quickly when the price gets right but there are some good REO deals out there.
I always offer 15-20% below the comps for similar properties. It’s totally low ball that lenders will often reject or ignore. Then, they wait and wait and wait and when it doesn’t sell, they lower the asking. Then I come back and offer 10% below my original offer. I do this on multiple REO’s in the area. Pretty soon, someone realizes that they are competing for me with other REOs in the area and I usually get my asking price.
It takes patience and discipline. Make your offers on numbers alone - don’t get emotionally involved with any target property. As an investor, your goal is to get the most for your money and pay the least to aquire it.
Hi Deal Hunter.Did you mean 15-20% below ARV?
Thanks.Kris.
One of the best things you can do when putting in an offer on an REO is to show cash funds. The second best thing you can do is to justify your offer. The asset managers handling the REO portfolios have hundreds of properties per person to manage. If, when you submit your offer to the Realtor, you also submit any docs you have that justify your offer (remember the less docs to get to your point the better. A single summary page is best. Anything more will more than likely not be read.) you could have a higher chance of getting it accepted. Ask the REO Realtor to present your offer justification to the asset manager for review along with your offer.
If your justification statement is strong enough you could very well win the bid.
Also, for those of you who have the capital to do this…
If you are able to purchase more than one property at a time asset managers will reduce prices for buyers purchasing multiple properties out of their portfolio.
GooD LucK! :beer
No, 15-20% below actual as-is, before repairs. I know it’s usually the low ball offer and most banks will ignore, but in our area, it’s just a matter of waiting until the bank reduces the price. There are so much inventory, that there is no sense in being the highest bid right off the bat.