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re: Real Estate Question: Haggling a Foreclosure
Posted on 11/20/14 at 2:54 pm to yankeeundercover
Posted on 11/20/14 at 2:54 pm to yankeeundercover
quote:
The bank doesn't have feelings, slap dick.
this, they just want to unload it, there is a point to where they may not counter, but in effect that is a counter, a silent message to move your offer up into the realistic ballpark
0
Posted on 11/20/14 at 2:54 pm to Restomod
quote:
not necessarily, too low and you insult and depending on the person they may not counter out of spite
It's bank owned, chief.
And like he said, frick it. No harm in trying.
Posted on 11/20/14 at 2:56 pm to Restomod
quote:
This happens a lot with short sales, almost customary
I bought my home on a short sale and we went from initial offer through 2 counters to under contract in 24 hours.
Posted on 11/20/14 at 2:59 pm to yankeeundercover
quote:
The bank doesn't have feelings, slap dick
no emotional attachment, but doesn't care if they lose a sale that's obnoxiously lowballing.
But thanks fruityass.
Posted on 11/20/14 at 3:01 pm to Shenanigans
quote:
bought my home on a short sale and we went from initial offer through 2 counters to under contract in 24 hours.
Congrats?
Typically this isn't the case because not only does the seller have too agree, but so does the bank.
This takes time.
Posted on 11/20/14 at 3:12 pm to Restomod
I do get a "silent" counter, but what if they bite?
If they don't, then we simply re-approach with a higher opening.
I have the power, not them. I will simply focus on another property.......this one does need some help cosmetically and I suspect some other issues despite being built in 2006.
If they don't, then we simply re-approach with a higher opening.
I have the power, not them. I will simply focus on another property.......this one does need some help cosmetically and I suspect some other issues despite being built in 2006.
Posted on 11/20/14 at 3:33 pm to CharlesLSU
I work with the ORE property of a large bank in Louisiana. Much of the information in this thread is not accurate with regards to how our particular bank handles repossessed property. Additionally, the concept of the bank getting the money lost back from another source is news to me, when the bank makes a bad loan it takes the hit (this statement is based on the size and quality of the house you are specifically looking, around $600k and not some rural development loans).
If the bank has already had the ORE property on their books for 18 months, they have most likely already written down the book balance and lowered the asking price accordingly. Personally, I would not be offended if someone offers a lowball price, but I may just decline the offer without a counteroffer as I don't deem a really lowball offer as a legitimate offer. If the initial offer is in the ballpark, then I would certainly counter.
Unless the property has something significantly wrong with it (which should be reflected in the price), then there is no need for the bank just to unload a property for significantly less than what it is worth. There is always a little play in the numbers, as there is with any real estate deal, but we get so many calls from folks that think they are going to buy stuff for pennies on the dollar ... And that just isn't going to happen with a bank that has stockholders to answer to.
If the bank has already had the ORE property on their books for 18 months, they have most likely already written down the book balance and lowered the asking price accordingly. Personally, I would not be offended if someone offers a lowball price, but I may just decline the offer without a counteroffer as I don't deem a really lowball offer as a legitimate offer. If the initial offer is in the ballpark, then I would certainly counter.
Unless the property has something significantly wrong with it (which should be reflected in the price), then there is no need for the bank just to unload a property for significantly less than what it is worth. There is always a little play in the numbers, as there is with any real estate deal, but we get so many calls from folks that think they are going to buy stuff for pennies on the dollar ... And that just isn't going to happen with a bank that has stockholders to answer to.
Posted on 11/20/14 at 3:39 pm to DivotBreath
quote:
Unless the property has something significantly wrong with it (which should be reflected in the price), then there is no need for the bank just to unload a property for significantly less than what it is worth. There is always a little play in the numbers, as there is with any real estate deal, but we get so many calls from folks that think they are going to buy stuff for pennies on the dollar ... And that just isn't going to happen with a bank that has stockholders to answer to.
Thats right. They want to get it off of their books, but they wont take a loss unless things get real bad.
Posted on 11/20/14 at 4:11 pm to DivotBreath
quote:
Personally, I would not be offended if someone offers a lowball price, but I may just decline the offer without a counteroffer as I don't deem a really lowball offer as a legitimate offer.
Thank you, this was my point and has been my experience as well.
Posted on 11/20/14 at 4:45 pm to CharlesLSU
If you are not borderline offending someone you are not getting a good deal. I am speaking about investment properties here, not personal houses. I understand people who pay more for where they want to live.
Posted on 11/20/14 at 5:22 pm to DivotBreath
quote:
Additionally, the concept of the bank getting the money lost back from another source is news to me,
So you are telling me that when a Bank hands over an REO property to a management firm like Safegaurd, MCS, Five Brothers, etc that the banks do not get money for maintenance and repairs back from HUD?
LINK
You are also stating that on FHA and VA insured loans the banks lose money on them?
Posted on 11/20/14 at 6:44 pm to stout
If I could get it for 400k, I'd be very happy......
Posted on 11/20/14 at 9:18 pm to stout
quote:
quote: Additionally, the concept of the bank getting the money lost back from another source is news to me, So you are telling me that when a Bank hands over an REO property to a management firm like Safegaurd, MCS, Five Brothers, etc that the banks do not get money for maintenance and repairs back from HUD? LINK You are also stating that on FHA and VA insured loans the banks lose money on them?
No, but I also am not making assumptions and generalizations about the property the OP is referring to in his question. Not all ORE property is turned over to a management company and not all will qualify for reimbursement of expenses or losses. To argue that every loan loss is just a matter of creative bookkeeping on behalf of the bank is just incorrect.
Posted on 11/20/14 at 9:53 pm to DivotBreath
I know not every house qualifies but the amount that are losses for the banks is smaller than people realize though. It's why the whole bailout was a joke of epic proportions. We were already subsidizing a huge portion of losses the banks took before the bailout even happened then we just gave them billions more.
You can't deny that there is some creative bookkeeping that happens in regard to banks reporting losses on these properties. I have seen it first hand.
You really need to research on the Governments involvement with Bank of America and how they are all intertwined with Safeguard who is the largest asset management firm in the industry. I am not sure how anyone could deny that the banks make more on repos these days than they used to. Some of it even to the point of profits or at the very least break even.
ETA: I am sure you are aware of this but not all properties have to be handed off to a management firm to qualify for reimbursement. Just that many larger banks find it easier than maintaining their own REO division.
You can't deny that there is some creative bookkeeping that happens in regard to banks reporting losses on these properties. I have seen it first hand.
You really need to research on the Governments involvement with Bank of America and how they are all intertwined with Safeguard who is the largest asset management firm in the industry. I am not sure how anyone could deny that the banks make more on repos these days than they used to. Some of it even to the point of profits or at the very least break even.
ETA: I am sure you are aware of this but not all properties have to be handed off to a management firm to qualify for reimbursement. Just that many larger banks find it easier than maintaining their own REO division.
This post was edited on 11/20/14 at 9:55 pm
Posted on 11/20/14 at 9:54 pm to CharlesLSU
I'm under contract on a REO (bank owned property) right now. Asking price was $180k it sat on the market for a while. They dropped the asking price to $139k and we offered $97k. They responded saying that was below they're reserve price and to resubmit if we were interested. We resubmitted at 110k they countered at $129k. We didn't wanto get into a multiple offer situation so we asked if there were any other offers on the property. There were no offers so we submitted $124k and they accepted.
Posted on 11/20/14 at 10:00 pm to AUtigR24
I'll add that this is my first foreclosure purchase and the process has been a breeze so far (to my surprise). I'm doing the FHA 203k loan because the property needs some rehab. The home inspection found some items that need attention so we submitted them to the bank askingb for them fix or give us a credit at closing.
Posted on 11/21/14 at 12:55 am to CharlesLSU
Good thread. 
Posted on 11/21/14 at 7:31 am to AUtigR24
I looked at doing a 203k a while back, but was worried about having my hands tried as far as who did the work. I like to sub the work that I can't do out myself. if I remember correctly, for the 203k you have to have a gc do the work so they can keep tabs on the money, but you also have to have all of that planned ahead before they approve you. So it leaves you very little time to vet gc's. Can you let me know the timeline of the process you are taking and How it has worked out?
Posted on 11/21/14 at 9:24 am to Creamer
Sure, go to your lendor and get pre-approved for your FHA 203k loan. Not all lendors do them, and some of the ones that do participate aren't very "eager" to. I called around and found someone that was excited about the project as I was so that's who I went with.
Next step obviously find your property / make offer / enter contract.
Once you agree on a price with the seller and enter into a contract you can start running your contractors through the property. You don't have much time maybe 2 weeks to get all of your estimates. The appraisal can't happen until your lendor has the rennovation estimates because you get 2 appraisals. One appraisal is an "as-is" value. The other appraisal is based on the rennovations you and your GC agree on and submit to lendor.
After you find a GC with the estimate you like submit it to the lendor. She/He will then contact your GC and verify they are licensed / insured. They will also explain to your GC how the draws work to make sure your contractor is ok with how the money is dispersed.
After that the appraisal is ordered and if everything goes well you should be closing in the weeks after the appraisal.
Construction / Renovation must start within 30 days after closing and must be completed within 6 months. You can submit changes to your plans as long as both you and the contractor agree as we as the lendor.
The process goes fast, I found myself walking through the property with 2 or even 3 contractors a day trying to get estimates together for the lendor.
The faster you get the info for the lendor the faster they can send out the appraiser.
I was very skeptical of the FHA203k but after gonig through it I would recommend it to anyone that wants to rehab / rennovate a home.
Next step obviously find your property / make offer / enter contract.
Once you agree on a price with the seller and enter into a contract you can start running your contractors through the property. You don't have much time maybe 2 weeks to get all of your estimates. The appraisal can't happen until your lendor has the rennovation estimates because you get 2 appraisals. One appraisal is an "as-is" value. The other appraisal is based on the rennovations you and your GC agree on and submit to lendor.
After you find a GC with the estimate you like submit it to the lendor. She/He will then contact your GC and verify they are licensed / insured. They will also explain to your GC how the draws work to make sure your contractor is ok with how the money is dispersed.
After that the appraisal is ordered and if everything goes well you should be closing in the weeks after the appraisal.
Construction / Renovation must start within 30 days after closing and must be completed within 6 months. You can submit changes to your plans as long as both you and the contractor agree as we as the lendor.
The process goes fast, I found myself walking through the property with 2 or even 3 contractors a day trying to get estimates together for the lendor.
The faster you get the info for the lendor the faster they can send out the appraiser.
I was very skeptical of the FHA203k but after gonig through it I would recommend it to anyone that wants to rehab / rennovate a home.
Posted on 11/21/14 at 10:30 am to Shenanigans
quote:
I bought my home on a short sale and we went from initial offer through 2 counters to under contract in 24 hours.
Good deal. However, a short sale and a foreclosure sale are two different animals.
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