how much to discount a repo - Posted by Tim in AR

Posted by Tim on March 30, 2006 at 19:00:48:

Repo dep’s have a contract with their realtor. The realtor has a legal obligation to present all offers.


how much to discount a repo - Posted by Tim in AR

Posted by Tim in AR on March 30, 2006 at 08:44:05:

More than eight months ago I offered $47k on a repo listed at $79k by an out-of-town agency. I let them know then, as politely as I could, that they were way off. The realtor didn’t even respond to my offer - poor business. Eight months later the property is still for sale and now it’s listed at $49.9k hehehe. It full brick 2,200 s.f. and presents pretty well, needs mostly cosmetics, but has crummy apartments across the street and a shack next door. What luck do you think I would have with this approach: by-pass the realtor and go straight to the foreclosure department of the bank with an offer of $30k for their note. Does this sound at all likely? At that price, even after minor repairs this one would rent for nearly double the note payment.

Nothing to buy - note does not exist - Posted by John Corey

Posted by John Corey on March 31, 2006 at 09:28:38:


As you indicated that a bank is selling a property and that it was likely an REO there is no note to buy. When the bank finished the legal process to take the property back the note was effectively canceled. They hold the title to the property now. Otherwise the bank would be making payments to the bank. Yes, strange things do happen but I think you can assume the note no longer exists.

If you offered $47K before why do you expect that $30K will work now? What has changed on your side when it comes to the value and the repairs?

Always look for a bargain. When you get to a price that really works for you move forward rather than try to knock it down again and lose it to someone else.

The agent works for the bank and will likely do so in the future. Rather than upset them make another offer with the agent. Use your own agent if you like. The bank will have to pay the agent even if you approached direct. They will likely have other properties that they place with agent in the future. Hence the bank can not save anything by dealing with you direct, they will need to keep the agent in the loop and you should try to keep the agent happy. Once they realize that you are correct about prices and can perform with cash they will more likely work with you in the future when you come in way below the initial price. We do not know who set the price this time around. Maybe it was the agent. Maybe it was someone at the bank using what they wanted out of the deal to recover what they are in for.

Netting the above down.

  • It is unlikely the bank will deal with you direct once a property is listed.
  • When a property is being offered for sale by a bank it is an REO. They are the owner. There is no note to buy.
  • The agent might be dumb or otherwise a waste. At the same time they are the conduit to the bank. Once they know you are real and you know your prices they might come to you for advice and to let you know when deals are coming down the pipe. They may want you to deal with them direct if you do not use another agent.

Focus on getting the deal under contract.

John Corey