Discount REO's
Whats the best way to get REO's at a discount? Submit your offer based on comps and reapirs of FMV? If the bank has had the REO for 2 years, just put in a lowball offer say 30% of asking price? Someone talk to me about buying conventional REOs. Not HUD or VA. Anyone had any luck getting banks to come off their asking price???
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First find out the ARV.
Then subtract all of your cost, rehab, selling, hard money ect. The sbubtract your profit.
That is the max that you should offer.
Based off of what I've heard.....
Try to find out what the Banks BPO or appraisal came in at.
Get (the low) comps in the area.
When you estimate repairs err on the High (extremly high) side.
Tell them all the reasons why it won't (hasn't) sold (ugly, too big, too small, ugly, bad layout, association fee, noise, polution, crime, dogs barking, bad neighbors, bad neighborhood, etc...
You want to convince the bank that their valuation for the property is way off and that you're offer reflects the true value.
It never hurts to mention holding costs, realtor fees (if not yet listed), and fast, all cash offers are always appealing (HML's, private money, etc).
I'd be interested in hearing what percentage of FMV people typically offer. From people who do this a lot that I know (this may be LeGrand's formula):
Maximum Allowable Offer = (ARV X 70%) - Repairs
I haven't found any consistancies to how and when banks will come down. I'd love to hear other opinions as well.
What's "ARV", please?
tjmarta,
ARV = after repaired value
How do you present all the information that Hibby mentioned if it is listed with an agent? Do you send a package of information with the PA? I have a couple I am looking at and have been told that they don't accept much more than a 10% discount. At these discounts it doesn't make sense and I need to communicate the reasons why like you said. Just not sure the best way of doing it.
Dan