Is this offer realistic for a REO?

Question

So I've never bought a REO but there's one that's been for sale for about 3-4 months where I recently purchased a SFH rental.

The REO Listed @ 90k according to records this is what seller owed when foreclosed on. (i looked them up myself)

My property Purchased in Sept for 62.5k

The REO is similar to mine but from what I can see the exterior it's not as well kept -it's wood/vinyl siding looks dingy- I have stucco holding color well.
-The roof is a 20yr & looks old - I have 35yr that's 6 years old

I haven't had a chance to see the inside since the REO agent hasn't called me back.

*My Thoughts*
I Def don't think the house is worth 90k since I paid 62.5. I was thinking about making an all cash offer of 30-35k considering the exterior and fig the asset manager might be motivated since it's end of year. The offer would be contingent on inspections of course.

For the REO buyers out there is this offer even worth making or would it just be laughed at? what would you consider doing?

J Scott · Answer

I know a lot of people will tell you to go for it, and see what happens. But, realistically, you'll never get this property anywhere near your offer price unless/until the the list price is dropped several times.

Why would an asset manager sell a property at 60% off list price? If he were that desperate to get rid of it, he'd drop the price by 20% and see if he got interest. If not, he'd drop the price again by 20% and see if he got interest. He'd rather keep doing that then just accept an offer at 40% of list off the bat.

Not saying this to discourage you, but hopefully save you some time and effort...if you think you can offer closing to 60% of list price -- and if the property has been on the market for several months already -- you might want to give it a (long-)shot, but not if your max price is only $35K.

Account Closed · Answer

i agree with J here..and to add a little to what he said, don't think that you have to come up if you don't wanna pay over 35k...move on to the next deal..there's plenty of em out there..let some other guy pay too much, or let the house sit on the market and wait for the seller to be more motivated and start dropping the price :)

Mickey Harrison · Answer

Thanks for the responses. I'll do as suggested, keep an eye on the prop and see if the price comes down to a more favorable price.

Don Hines · Answer

You didn't mention what the ARV is. So, it is hard to say. I use the formula ARV*65%-rehab on properties with an ARV over $100k.
I have never been arrested or shot at for lowball offers. But, you do run the risk of getting a bad reputation with the listing agents. If you really think the offer should be that much lower, I would wait until the asking price gets down to where my offer would be in the 70% to 80% range.
Don

Steve L. · Answer

Banks price properties using a system. Obtain one or more BPO's to determine list price. After it is on the market for 30-90 days lower price. Continue to lower the price every 30 days. After about 180 days or a couple busted escrows send it to auction or switch listing agents.

Without inside information: a listing agent telling you the bank is getting ready to dump the property, major repair issues (cracked foundations, mold, fire, etc) your chances are extremely low.

Can you find more comps that show the property should be sold for less? If so you can submit 3-6 comps, a repair estimate from a contractor and that will increase your odds (although they are still low).

In my opinion, you are better offer starting with better priced properties then focusing on this particular one.

Andrew Saquing · Answer

go for it the worst that can happen is they say no

Martha Moore · Answer

It's difficult to assume the property's true worth especially if you have not seen what the interior is like. Try your luck though, the seller might agree with what you want.

Greg P. · Answer

That's pretty low, but you never know. Try it. Good luck.

Is this offer realistic for a REO?

Is this offer realistic for a REO?

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