Just received counter offer from bank. Now what? - Posted by Brett

Posted by Stacy (AZ) on June 10, 2000 at 20:09:16:

Hello to you too! Haven’t seen you post in ages…glad to see you still lurk around and occasionally jump up between “deals” and pop a cap.

Stacy

Just received counter offer from bank. Now what? - Posted by Brett

Posted by Brett on June 09, 2000 at 15:54:42:

I found a bank owned house here in town that has a lot of potential. It was bought back by the bank for 35,000 at auction on April 7. It’s been listed with a Realtor for about 6 weeks at 68,000. The FMV after repairs is about 100,000. It will require quite a bit of work, and repairs should run near 15,000 give or take. I offered 35,000 with no contingencies on Tuesday and just received their counter offer at 65,000. What now? I told the Realtor we would wait and think about it over the weekend. I would still be very comfortable paying 45,000 for it and maybe a little more. What would you pro’s consider offering now and how long should I wait? There haven’t been any other offers, We were like the third couple to look at it, and there was only one couple really interested but had to sell their house first and the bank won’t accept sale contingencies. Any opinions or advice would be greatly appreciated. Thanks for all of your help! -Brett

Re: Just received counter offer from bank. Now what? - Posted by Bob Selby

Posted by Bob Selby on June 10, 2000 at 22:04:21:

Well, the bank usually has a decent idea of what the property is worth based on the BPO that the listing agent has submitted to them. Coming in with a half price offer probably gave them a pretty good laugh. The guy who suggested that you offer a thousand or so more in light of a $30,000 difference in their counter is out of his mind IMO.

What you need to do is determine whats the most you can afford to pay for this property and still be profitable, and stick to your guns. Make sure its a realistic number and dont hold out for a pie in the sky return. A decent deal is a lot better than no deal at all, take it from someone who has been too greedy in the past, only to kick my own ass later because I let a $5000 divide between what I wanted to pay, and what the bank was willing to take, cost me a home that could of made me 25 grand when it flipped.

If 45k is the most you are willing to spend and thats your bottom line, counter them at 45k. If they say no and someone else is willing to pay more, more power to em. Dont get emotional over the sale and get into a bidding war. If the bank still says no or comes back with a counterance thats still too high, tell them to have a nice day and wait it out. Check back with the agent in a couple of weeks and see if its still available.

These banks only give the agents so much time to sell these homes. As the agents contract on the property draws to a close and they still havent sold it, you can bet that the agent will put more pressure on the bank to sell it, rather than have the deal taken from them and be reassigned to another agency.

Be patient and stand on reasonable ground. If the bank is out of line on their price (which many times they are) they will eventually come around. I just purchased a home from a bank which was orignally listed for 65k. Took 2 months of back and forth, but I ended up getting it for 27.5k after much persistance.

Good luck,

Bob

http://www.metro-homes.net

Determine what works for you - Posted by PBoone

Posted by PBoone on June 10, 2000 at 10:17:49:

I agree with Stacy in edging up the offer a little at a time, but always work with a figure that will work for you, your goals and the exit strategy, if necessary discuss the deal in detail with the selling agent. We base our offers on what if it becomes a rental? is it profitable after the 25% rule.
Pat

Re: Just received counter offer from bank. Now what? - Posted by Stacy (AZ)

Posted by Stacy (AZ) on June 09, 2000 at 16:23:37:

Consider this:

Counter-offer slightly more, this round. Try $36,500.

They’ll re-counter something too high.

Then counter $37,116. Make it a smaller jump, and an odd number. Make it seem that you’re punching those digits on your calculator to squeeze an extra few dollars into your offer. Let the bank think you’re getting to your limit.

Caveat: I’ve never tried this with a bank, but a guy I spoke to at the Lender’s seminar who does several rehabs a year told me this works every time with him. I can’t wait to try it.

Food for thought, might work.

Stacy

Re: Careful…I’m out of my mind. - Posted by Stacy (AZ)

Posted by Stacy (AZ) on June 11, 2000 at 01:30:26:

Bob, welcome to the board.

The first property I ever bought as an investment, a few years ago, was at 46% of FMV. The example I gave in my post (if the negotiations happened to end at $36,116) was at 54.6% of asking price.

Your example was 42.3% of asking price, the lowest of all these examples.

What am I missing? Or, are you saying I’m out of my mind for paying too much? Not clear.

Stacy

Re: Just received counter offer from bank. Now what? - Posted by Potash

Posted by Potash on June 10, 2000 at 17:22:36:

yea, right.

Re: Careful…I’m out of my mind. - Posted by Bob Selby

Posted by Bob Selby on June 11, 2000 at 07:39:34:

Well, I was speaking of my personal experiences in dealing with bank owned properties. In the Detroit area, I have never seen nor heard of anyone purchasing a REO property of this nature for less than 50% of the asking price unless there were some unusual circumstances present. Dont get me wrong, I say lowball the hell out of em… the cheaper you can buy it the better. However, with the bank countering over 30k higher than the original offer on this particular property, seems to indicate the bank has a pretty good idea of what they want out of it, and to try up the ante with a token increase of a thousand dollars or so in light of that kind of spread, IMO would just be a waste of time for the buyer and would probably just annoy the realtor with such trivial negotiations.

Maybe you can just chalk it up to different pricing methods in different areas. If you are consistently buying your properties here for less than 50% of the asking price, then clearly the banks holding property in your area must be overpricing their homes dramatically in hopes of netting somebody willing to pay it. My experience has been that on average I have been aqquiring bank owned homes for 60% to 75% of their asking price. (note, asking price, not FMV, that would be nuts in most instances)

I guess that either means that the realtors in my area are setting their BPO’s more accurately, or perhaps Im the one who is out of his mind and is paying too much for my houses and thusly need to follow your example a bit better :slight_smile:

I do not think it is the latter. (well, hope so anyways :P) and want to stress the core of my original posting, which was to not get emotional about the sale and end up paying too much for it, and that if they really are overpricing the home, letting it sit on their hands a bit will always correct that.