A little advice, please. I'm very interested in a fannie mae homepath property and it's listed at 79,900. It has a beautiful floor plan but needs tons of repairs. I bet homes in that area sell for 130-140k. The home may need a roof, foundation work, new sheetrock inside, needs new flooring, paint, possible termites or old termite damage, huge expensive trees cut down...
I want to bid 40k. Insane? Possible? It's been on the market 68 days. Of 40 is insane, what's a logical bid?
In my area they knock it down a couple of grand every month or so. I have bid on many many homepath properties and never have I seem them budge more then 500 dollars off of what they are asking. For instance. There was a property they listed it for 14,900 (needed lots of work) I offered 12,000 they countered back 14,500. I left it which was just as well because I inspected the property even more and there were projects I just didn't want to do like replacing 14 different windows. Needless to say a few weeks/months later they still received no offers and kept knocking down the price. They finally listed it at 9,900 and got it under contract. So I suppose that will give you sort of an idea. Some times you will write an offer and they won't even let you know they don't want to accept it and leave you hanging for a few weeks to you sort of figure it out on your own.
Thanks Tariq. This is helpful. Guess I'll just keep an eye on it for a while. I really love it, but I'm unwilling to pay that much due to so any repairs!
Typically they will always counter. So when they countered at $12,500 in that instance, they most certainly would have kept countering lower. Why? Because people expect to negotiate so they fulfill the desire.
Fannie Mae's list prices are determined by appraised values. Typically they are in fact reduced every 30 days or so, like every other foreclosure or retail property. I would say usually you can get 5-10% off list price.
When the property is listed for only 68 days, and you want to offer 50% of list, there's nothing really to justify that price. They would rather reduce the price $10K a month for 3 more months rather than sell it to you for $40K right now.
Fannie Mae's goal is to stabilize neighborhoods. Selling properties for $.30 on the dollar does not meet their corporate goal so they will avoid it at all costs.
thanks mark, I appreciate the input!
Anyone else have thoughts? Thanks again!
I think it really comes down to your market. Which Is why I stated "in my area". For me in the Baltimore area they are not very investor friendly so they will rarely budge on price and keep knocking it down. I have it almost down to a time table of when a property will be knocked down 5, 2,500, or 2000 grand. The best thing to do for you is just to try, worst that can happen is they ignore you.
Welcome to BP.
There is no formula fit all.
You must know ARV of this particular property and than you have figure;
Once you have both figures ARV + All costs mentioned above) than you also need to know how much you want to profit from this deal than you will know your purchase price.
Hope it helps you.
Thank you guys. Much appreciated!
From what I have seen here, Fannie Mae will give you a counter very close to the asking price.
They would prefer to hold and reduce it slowly over time, DOM does not mean anything to them.
You say you "bet" that home values are $130k-$140k and that the home "may" need substantial repairs.
Sounds like you have a lot of due diligence to do before proceeding.
Agree with others that say market time means zero to them. They want top dollar.
I'd say put in a bid that makes sense based on your numbers. If you've calculated you need to purchase the property at $40K, go ahead and try it. Follow what your calculated numbers tell you. You're not going to hurt the bank's feelings with a low offer. If they take it, great. If not and you're unwilling to go in at a higher price, let them know its a standing offer so over the next few months when they drop more and more closer to your $40K, your offer is still there waiting if no one else took it. The bank wants top dollar, but I've seen strange things happen during my short real estate experience-- $130K went for around $45K to my friend last summer, wow!
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