HELP - Questions on possible first deal

[Zion R.E.S.]

First of all, I am brand new to the REI field.  There is a property a few houses away from my residence that I am interested in.  Here is the rundown so far as I know it.  The house has been abandoned since last year (The previous owner has a new home furnsihed by the state and a new roomate named Bubba)  According to the county auditors website, the house was recently purchased  for $40,000, (from what I can tell at a Sheriff's auction).  I haven't been on the inside, but it looks as if the house is need of some repairs, definetly a good painting and cleaning.  It's not run down, but  you can tell it has been un-occupied for a while.  The house next door is identical and sold for $72,000 in 2002.  Acoording to the auditors website, the houses which are similiar to this seem to have been sold in the $68,000 - $73,000 range, even though I could not find any recent sells.  The house in question is currently for sale, it seems as is.  There has not been any work done as I can tell and I have never seen anyone working on it.  After all of this, my question is;  from this information, what would be a reasonable asking price for this if I decide to contract it and assign it?  Also, if I decide to bird dog this house, what is my next step and how do I protect myself from an investor purchasing the home out from under me. Any information will be helpful.

[ARamirez]

Well if the house was purchased for only $40k that means someone of an investor or lender variety bought it back. If the house doesn'thave some sort of a sign on it at present you need to get in touch with the new owner and see if they are wanting to sell it.

If an investor bought it and does not want to do repairs and resell he may sell it to you for up to $5,000 more than what he paid.

[Zion R.E.S.]

Yes, there is a for sale sign in the front yard.  The county website states the owner as a bank, but it has a Sheriffs deed.  Thanks for the info.

[joehagan222]

Sheriff Sale;

If the Sheriff sold this house,and that bank has title,the Bank must have held mortgage on the house pryer to sale(Assuming this). The bank must have bid to protect its interest! The only way to find out is to ask the bank. If you have the crdit, the bank will probably work with you! They probably just want their money back and a little profit!!!   (JOE)

[Zion R.E.S.]

Thanks Joe.

Since the for sale sign is via a realtor, should I deal with him or the bank directly?  Would it hurt to write an offer to the agent and see what his response is or should I talk to him first to get more specifics?

[ARamirez]

This is now what is called an REO property. best thing you can do is offer maybe $42,000 and see if the bank will let it go. If there is a realtor sign out every other investor has prolly already bid that and got rejected. Contact the agent and feel him/her out to see if you can find out what other offers if any have gone out and why they didn't work out. Object being...bid the lowest amount the bank is willing to let it go for.

BE SURE to inspect the house yourself by asking the realtor to let ya in. find out how much it will cost to make it look like all the other house and go from there.

[Frank J. Festa Jr.]

Zion R.E.S.

When you deal with the Realtor you must pay them a commission. In New Jersey that could be as high as 6%.

Good Luck, Frank

[ARamirez]

The realtor commission is of no real consequence when dealing with an REO. The bank already knows they are going to have to pay the commission.

[Frank J. Festa Jr.]

Mr. Ramirez II:

With all due respect, I am in business to make a profit. I must take that amount into consideration.

That may be the deal killer for me.

Frank

[ARamirez]

Frank,

Why should you be concerned with what the realtor's commission is if you are the buyer?

Now understandable people should know what realtor's commissions are so that they can better negotiate with FSBOs or possibly to wait out for a realtor's contract to end. But in either case it is the seller's responsibility to pay ALL realtor's commissions. The price you offer is the price you offer regardless of what a realtor's commissions are.

Remember this applies if YOU are the BUYER.