Matt,
I’d start lower, because you can always go up with your offer, not up.
If the place has been sitting for a long time unsold, then the bank may be more willing to sell at a lower price.
You may also want to go to the home and take some photos of the repairs needed and send them with the offer.
Chances are the bank does not know the home is in need of that many repairs.
Make the place look like a real dog in the pics and it may help negotiate a better price.
Bottom line is, after you make a low offer, the bank will respond and you’ll know better where they stand.
The pre-approval letter and $1k earnest money will help as well.
Perhaps set a Fast closing date as well.
Show them you are serious and they will answer you faster.
My brother just called me and asked about a property that he is looking at. According to him, it is bank owned due to a foreclosure and has been sitting on the market for months. It is semi-run down and needs a lot of cosmetics, carpet, paint, windows, stuff like that. Nothing serious though. The ARV on the house is $55-60,000 and the bank is asking $30,000. My brother has excellent credit and wants to buy the house for himself to fix up and live in.
My brother has already been pre-approved for the $30,000, but wants to add in another $10,000 for repairs. I had told him to approach the bank that owns the house with a pre-approval letter for $20,000 and $1,000 earnest money. Am I on the right track here? Are the chances that the bank would take $20,000 for the place be higher if he does this? Any better ideas for working out a better deal with the bank?
I would offer the 30,000 (full price)with 5,000 escroed at closing for rehab, and owner financing with the seller paying all closing costs. It might be a good idea to try to get preapproved with the bank that is selling the home then make the offer.
Posted by Redline on January 08, 2001 at 15:15:19:
If the deal eventually does fly, your bro can look into an FHA 203K loan. These loans are specifically for owner-occupants who are buying properties that need fix-up work - a min of $5k I believe. Check it out.
Jim’s advice is good. However, as far as the fix up $$ for the house with the purchase loan, there are only a certain few programs that allow such a thing. If the selling bank will kick back some money that would help, but that may mess up his loan. Your brother needs to check with the people he is preapproved with to see what is possible in the offer he writes.