What's The Bank Thinking?
I tried to help a couple in distress who will lose their home due to foreclosure tomorrow. I arranged to short-sale with the bank but they insisted my offer was too low. Ok, so my initial offer was low, however I upped it to what I feel is acceptable.
Bank did a drive-by and says home is worth $110k, I have been in and see it as needing 15-18k to be ready for resale. What's wrong with my $78k bid? After realtor fees, closing costs, atty fees and rehab, the bank will net $75k....hence my offer is the better deal. They told me I needed to bid in the 100k range. Can anyone guess as to why they're being so tough on this? It's obvious I won't do a deal that nets me a loss.
Hi:
You tried to help the couple in distress and made a reasonable offer to the bank.Some of the banks are not realistic and try to recover the unpaid mortgage in full without realizing that the investors have to make a living too. Let them foreclose the property and suffer a greater loss down the road. You did the right thing. Keep finding the next deal.
sayana
Hey,
Banks aren't as stupid, lazy or naive as everyone seems to think.
Generally REO go for near retail (minus repairs). Which would tie out, give or take, to your experience.
Banks don't care about us making money; their job is to make as much money on a house as they can.
I understand they want to make as much money as possible. However there comes a point where they're beginning to lose touch with reality. When the amount they expect is greater than ARV minus rehab costs, then there's a problem.
It sounds like everyone is concerned when the bank has an unrealistic view of the property's value, no? Interestingly enough, we investors (and I'm one too...) think it's the greatest thing in the world when the bank has an unrealistically LOW estimate of a property's value. Unrealistic values happen all of the time due to a number of sources. Sometimes the broker that does the BPO sets too high of an opinion - since he wants more BPO business from the bank in question. Sometimes the person working the foreclosure desk is trying to make points with their boss, etc. etc....
Put you best reasonable offer forward. If they don't like it (or very close to it) then walk. If they truly are high for the market, you'll soon have another chance at it. If not, on to the next one...
-Jeff
I just want to know what you found for 110K in the Reston, Va. area!?!!? :-D
Hehehe, for $110k in Reston you can purchase someone's garage.....maybe.
Banks are crazy sometimes. We are currently working with the OCWEN Bank group out of FL on a foreclosure locally. It sold for $320K 2 years ago and comps support that.
They forclosed and were owed $299K, we put in an offer immediately for $245K. The bank baulked.
We said ok and walked. We now have given them a contract again for $203K as they have been consistently dropping their asking price from the $299K they were owed.
They are considering it now. Saved us $32K and we think we already have a buyer lined up that could purchase it in the $300K area as it is in a HIGHLY desirable school district surrounded by people building Million $ homes.
For some reason realators in the area think if it is banked owned it is trash and they won't show them to their buyers, plus the Listing Agent the bank is using is a No-name agency in town and their marketing efforts suck at best.
It works for us though.
Is it too late?
Sounds like they are thinking just take off the 10% selling costs off FMV. Can you present the fix-up pics or docs w/your offer to show why you offer 78K? Maybe you just have not sold your offer. If you started off ridiculously low, you set them up to just figure you were haggling. Sell your offer with facts.
~~ Re: 'garage' joke:
I joke about my son buying a 'fixer shack' for 340K in Alex. last spring. The bidding wars were crazy for SFshacks in NoVa.