REO Auctions - % discount off list price?

Question

Hi all, looking at an REO foreclosure that is at auction. The auction states the list price is 86k, starting bid is 62k. For additional background, the property has been auctioned and re-auctioned for months with no sale. The highest I've seen bids in the past reach is 67k. Currently there is no other competition on this property for reasons that aren't relevant to my question.

I *THINK* I read before that banks may accept up to 20% off list price(but probably not more)...

Does that sound right to anyone with experience in this area?

I’m trying not to overbid but still win the property (obviously).

Matt Crusinberry · Answer

@Scott Brown, It has been my experience that banks will typically accept offers in and around 80% (give or take a few percentages). However, it's usually different for different banks and their thresholds based on market norms (i.e. Wells Fargo is willing to let properties go at a lower rate to empty some of it's inventory, pre-covid... while smaller banks hold onto it until it meets their reserve price, which is typically around 78-86% or as I've found in my area). If the property keeps starting over to be auctioned at a new date, there may come a time where they'll just start it off at that price or their reserve price as it were. I hope this helps in some way, but it sounds like you have the right idea.

Something to keep in mind, and that I would recommend, is that you run your own numbers for the property and it's  ARV. Don't base your offering price off of their numbers. Do your own homework, figure out your maximum offer, and go from there. I wish you the best of luck!