Negotiating the offer
Here's the deal:
Lender owned house
Owned for quite a while now
I offer well below lender's asking price to include all costs
If lender should counter, could one of my offers be to ask lender to carry a second (only if the second allows me to stay within my budget)?
Janis
chances are the lender wouldn't go for it. Most lenders want nothing else to do with the property and I've only seen small banks consider it.
Roger
Thank you for the reply, Roger.
I was wondering if that might be the case.
Janis
Hi Janis,
Another option that you may try is to offer the bank slightly less than what they are asking (as long as it will cashflow). Make your offer specific that they will finance the entire proeprty for you (including fix/clean up money).
I don't generally with with REO, but some people I know have been successful with that approach. The bank may consider it even more if they have been sitting on the property for a while. Hope this helps!
Best of Success!
BAMZ
BAMZ,
I have offered the banksubstantially less than what they were asking.
65% LTV, less holding, rehab and closing. Since the house needs considerable work, the offer I put in is pretty low.
Does this work?
Janis
I would keep an eye on the property. Keep sending in the offer every month. DO you think it will sell for that price? If not then you should wait until the bank decides to lower the price. Sending in your offer in every month will keep your offer in front of them when they decide to lower the price.
Tom
BAMZ,
In your initial response you wrote:
Another option that you may try is to offer the bank slightly less than what they are asking (as long as it will cashflow). Make your offer specific that they will finance the entire proeprty for you (including fix/clean up money).
Could you give me an example with these figures?
Property FMV 100,000
Bank currently asking 80,000
Rehab and closing 25 - 30,000
Thank you, Janis
Hi Janis,
I am interested in how you came up with the cost for rehab of $25-$30,000? Is the propety delapitated?
The trick would be for the bank to believe in your proposal so much, that they would want to unload the property. Any bank that I have ever dealt with that had a property that needed extension work (like you say that this one needs) has been quick to unload it.
So perhaps that bank does not belive that extensive repairs are needed, and if they are needed, they may believe that they wouldn't cost that much.
Even though it may not be real important, you may go to the Tax Accessors office and find out how much the bank paid for the property at the auction (or pull the foreclosure file to get an idea). This will atleast give you an idea of what the banks interest is in it. Dont get me wrong, a bank will still take a loss on an REO, but they would prefer not to.
I would resubmit a proposal to them. Show them how you came up to your estimated cost of repairs. Show them recent comps in the area and this will show them why it is in their best interest to work with you now. If you have ever done a rehab before, it would be a great idea to include before and after pictures on these as well!
Best of Success!
BAMZ
BAMZ,
The house has termite damage, needs a new central unit, new roof, a water pipe broke over the winter, and extensive interior repairs. Some of the repairs have been bid and information has been left in the house, so those numbers were easy. The hard costs to figure are costs for structural damage that exists. Until I have an inspection, I won't know what that entails.
It seems that I am having a hard time finding a realtor that will work with me in presenting offers that will favor my position. I have interviewed several. They initially want to work with me, but when it comes to the real deal, they don't seem to be willing to commit to my cause.
Thank you for helping me out. I appreciate your knowledge.
Janis
Janis,
It doesn't really sound like this is a good deal, if you are considering a second mortgage to keep your cashflow.
It sounds like the bank just wants to dump this property on the first available DYI that comes along.
My advise, for what it is worth, is find another deal, there are plenty of good deals around if you want to dig for them.
Don't get emotionally involved in property, it will cost you dearly in the end.
Mike.