Need Advice on a foreclosure

[Pawan77]

Dear REI Gurus,

I am following a foreclosed property closely. It is in a very good neighborhod bought in 2007 for $115K by someone, which was now foreclosed. 2 months back when I asked the bank they said i have to wait till listed with realtor if i need to see otherwise I can give an offer right to the bank officer. Anyways, I waited and wasted time. My thought was to offer $65k since its been sitting for a long time  and now the house was listed with an agent for $140K. What should I do? does the realtor even take my offer or wouldn't even consider? I know I am not offending anyone as the property is held by a bank.

I am a newbie.. please comment...

[Gold River]

Hi,

    First the term Guru is some what offensive to guys who don't sell overpriced packages containing less than sufficient education to become a trillionaire over night!

There are however wierd, excentric and borderline institutional professionals who sometimes are experts in some of the damndest area's of residential and commercial real estate only between 5:00 and 5:05 PM!   With that said and before I have my tonic here's my best answer, I think!

Price a property sold for in some previous point in history has no real bearing for value today, some area's of the country have lost substancial value and other area's of the country have been stable with growing economies and appreciating real estate values!

This bank and their agent may not have this property priced correctly? And then again the price may be correct however you won't know this until you study the comps and determine the FMV of this property! It sounds to me that this bank is currently thinking retail value, now that could change after 30, 60, 90 days on market with no offers which will probable put the bank into liquidation mode and make them more willing to look at any offers!

Today this bank is in retail thinking and looking at recovering the very best money from their property! Agent has to submit all offers by law, however bide your time a little and wait to see whether a retail buyer actually contracts on it in the first 30 days, if no offers I would make an offer based on FMV / ARV minus 30% average investor discount minus any repair / rehab cost's!


                       GR

[Pawan77]

GR - Thank you for your response.

In my previous post I mentioned Guru. GURU in sanscrit is one who is regarded as having great knowledge and wisdom in a certain area. As I am from asian ethnic background I used the word GURU to adress the REI experienced investors with utmost respect but not as someone trying to sell educational programs. Anyways, now I know how bad the program seller maligned the term GURU.

Thanks again for the post. It is very informative.

[foreclosure1234]

you can look at the comparable prices in the neighborhood to get an idea of prices of home in the area. Usually you can set your price to the neighborhood standards.

[Pawan77]

you can look at the comparable prices in the neighborhood to get an idea of prices of home in the area. Usually you can set your price to the neighborhood standards.

I just received comps in that subdivision. I am going to look into similar props to figure out the ARV. Thank you for your reply to my post.

[Pawan77]

Hello REI members,

So, I went saw this foreclosed property yesterday. The bank has teamed up with this realtor and put some money in fixing the repairs. First of all there is a huge water damage and the garage walls (foundation walls) bowed in due to water pressure from the yard (it is a split foyer style house). They fixed the bowed walls with 2X2 steel plates bolted to the concrete blocks and also graded all the yard surrounding the house for the rain water to flow away from the house. But still there is a some mold on the walls and some leaks. I scheduled a showing along with the basement repair contractor to estimate the repairs to bring it to the livable conditions.

Here is a question for you. After they regraded the yard they put grass seed but none of the seed germinated. Now if I buy I need to do the whole land scaping including removing weeds etc and put a lot of work. Is this considered a repair cost that I plug into the offer or is it considered an upgrade and stay out of the equation of the offer. In other words ARV-35%discount- repair cost. Do I include this in repairs?


Thank you

Pawan

[andydallas]

if you need to do it to sell/rent the property, then yes, you take that cost into account when you make your offer,,,

[Pawan77]

if you need to do it to sell/rent the property, then yes, you take that cost into account when you make your offer,,,

andydallas - Yes, I am going to turn it into rental. Thanks for the info.

[Pawan77]

Thank you all for reading my thread.....

I have scheduled another showing of the property and asked the basement repair and drywall contractors. I am fearing that the realtor might influence the contractors to give me a less expensive quote and hide any potential problems with the repairs. How do I handle the situation. Is it ok to ask the realtor to leave us alone? how do I convey message to him?

Sorry for asking silly questions but I dont trust this realtor at all....

Please suggest.

[Pawan77]

Dear REI members,

I am planning on putting an offer on a REO single family home listed as sold as is.

Can I put a contingency for inspection?
If my offer is accepted then can I ask for credits after inspection if more issues are found?

Thanks in advance for your help....

[andydallas]

unless its a HUD house you can get an inspection period, the contracts vary from state to state, however in Texas we normally get 10 days.  I normally can have all my inspections/bids in within a couple of days,,

As far as getting a credit after getting a property under contract, I hear people say they can do that, I never have been able to,,however I have walked away from a house, then put in a different, lower offer later

[Pawan77]

Andydallas,

Thank you for your response. What is the difference in the contract/negaotiation process between a ready to move in property and a sold as - is property. I guess my question is why do they say it is sold as is? sorry for my ignorance but appreciate your post.

Have a good day.

[andydallas]

in a 'normal' purchase you have an inspection and bring a list of things you want to ask the seller to fix before you buy,, with an "as is" property you have the inspection and figure out if the house is still worth paying what you agreed to in the contract because they aren't going to fix anything

[Pawan77]

Andydallas,

Thank you very much.....

[Pawan77]

OK, I placed an offer yesterday for $55k on this house and got my rejection today. The bank responded pretty quick on this....

I think it is the realtor and the bank together trying to sell it as a retail rather than a flip.. it would be interesting to see how a owner occupied will buy this with huge problems when the market is flooded with ready to move in houses for a good bargain.....

What surprises me is that a bank responding that quick on a REO offer????

The realtor also said that they had an offer liitle over $100k, which doesn't make sense to me as I know it needs atleast $45k worth of repairs and even if someone did on their own and saved the labor they will walk out with a max of $12-13k which is like 8% return on their investment... so for sure the realtor is lying.....

Just want to update you guys...

Thanks for reading and posting....