Posted by gerald(tx) on June 11, 2006 at 15:03:24:
The amount owed at foreclosure is immaterial to the lender at this point. He merely looks at it as having a non-performing asset to dispose of, and would like to get as much for the asset as they can.
The 70% ARV formula is great for a person rehabbing junkers, but when you step up to higher end properties such as this, it doesn’t apply so much. Common sense should be your guide.
And since this is going to be your personal residence, and don’t want to let it slip by, you can offer enough and still get a good buy. Start low and counteroffer higher to the point where you are happy.
We have been keeping an eye out for a house, but had not been actively searching for one. By chance, we found a home that fits every criteria that we have been looking for. After doing some research on our own we found out how much was owed when the bank forclosed on it. It is substantially less than what the REO agent has it listed for (nearly 200K less). The home has been vacant for months. The asking price is on par with the rest of the area, but it does need about 50K in repairs & updating, although we would do this ourselves for substantially less. Is there a certain formula or criteria that should be followed when submitting a first offer on an REO? I read somewhere that your first offer on an REO should be 70% AVR less repair costs. Is that true? We don’t want to offer too low an amount and then have them not want to deal with us at all, but we definitely want to get the best possible price. Any advice would be greatly appreciated!