Bank's price for a forecluse

[Greg Grant]

Probably a newb question, but it's been running through my head alot.

When I am searching properties I pull up various sites to gain information on the property and one of those I use is zillow.  Not for any specific reason, just because I have noticed different sites can have different advantages.

Anyways, when I pull up a foreclosed property on zillow it will say a brief history of the owner being in default, notice being given, then the bank taking possesion of the property.

When the bank takes possession, it will say something like:

12/30/15 - The lender, XYZ BANK, assumed this property for $90,100 during foreclosure proceedings and now owns it.

#1 - Now does that mean the bank is "out of pocket" $90,100 and/or that is what the previous owner had left on their mortgage?

#2 - Is that where I should start with my offers to buy the property?

#3 - Or is there a rule of thumb that applies here?

I fully understand that with other investors involved the price could go higher than my starting price/offer.  I'm just trying to seeing what a fair and realistic starting point would be.

Because what I've seen is that the bank will have the same property listed for $160,000, when comps fully remodeled (by an investor) sell for $165,000.  And the house needs an easy $20-30k.  

So I've been thinking that this is the bank trying to maximize their income by overpricing it hoping to get a potential new owner to pay just under retail or catch a newbie investor in order to make some money back from deals they lost on.

[David Midgett]

@Greg Grant - $90,100 is simply the price listed on the Certificate of Title in the foreclosure case - the price the bank took the property back at auction. In Florida, the banks can disclose a reserve price lower than full judgment, bid with a credit amount all the way to the full amount of their judgment, or mark their reserve bid as "hidden".

So if a foreclosure investor bid $90,099 in the online auction, and the bank's reserve was $300k, then the bank would take the property back with a assumed price of $90,100, even though the amount they were owed was much higher.

In other words, the bank's assumption price is completely irrelevant to your offer.  It is almost always less than the amount of the full judgment (which is principal, interest, taxes, attorney fees, court costs, etc).... otherwise a foreclosure investor would have bought the property at the auction.

Your offer should be based on what you think the property is worth fixed up, how much it will cost you to fix it up, and how much profit you want to make.

But there is absolutely no logic behind bank REO pricing. The asset manager picking a price may have a BPO from an agent, or could be picking the price out of thin air. You have no way of knowing.

Bottom line - your offer should not be based on what the bank was owed.