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question on foreclosures

Old 03-03-2009, 09:32 AM
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Default question on foreclosures

Looking at some properties to buy and one is a bank owned (foreclosure).

I have to put an offer for it, and was wondering if anybody has experience on how much asking price reduction are the banks most likely willing to accept.

50 cents per dollar?? 30?? 70??? I would think that banks would be REALLY motivated to sell now a days.

Somebody will recommend to look at comparable, but as most foreclosures.. this is sell AS IS. Even tough it looks really good I would like to go as low as the banks would take these days...

any recommendation or advice....????
Thanks in advance
Old 03-03-2009, 09:39 AM
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I think it more depends on the other offers they might get. If something is already a good deal, I've watched a couple bank owned properties go for asking or higher. Not to say you couldn't get lucky, just what I've seen in FL.
Old 03-03-2009, 10:00 AM
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no offers that we know of...
Old 03-03-2009, 11:39 AM
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If purchasing "as is" -- offer 25% of the 'value'. Also know that the 'value' is meaningless, no one has a clue as to what property is really worth right now.

I heard on the radio this morning, ABC News, that 1 in 20 homes in the US are now either foreclosed on or in danger of being foreclosed on. In Florida, 1 in 10 homes are now AT LEAST 60-days behind in mortgage payments.

Offer 25% of what you think it is worth, give the bank 24 or 48hrs to accept or make you a counter offer. Be prepared to walk away if necessary. DO NOT get emotional involved in buying a home, ever.
Old 03-03-2009, 11:43 AM
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The dollar in hand RULES! If this bank does not take your offer others will on equally good properties.
Old 03-03-2009, 12:22 PM
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Do you know how much is owed on the house? How much the bank is "in to it" for?

Earlier in my career (1989-1991) I developed systems to help banks track OREO properties and they generally would never sell them for less than the outstanding mortgage balance. Today's market may be different.

You can usually look up the original mortgage information at the local registry of deeds, most of them are on line now. It's all public record information available for free.
Old 03-03-2009, 12:31 PM
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Originally Posted by Eyeball View Post
...I heard on the radio this morning, ABC News, that 1 in 20 homes in the US are now either foreclosed on or in danger of being foreclosed on. ...

That is insane.

My wife and I always asked ourselves how people afforded these huge homes, I guess now we know the answer, they couldnt/cant afford them.
Old 03-03-2009, 12:40 PM
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I would not be afraid to offend anyone, especially the bank when submitting an offer. We've made some offers this year, that people have laughed at. To their surprise and mine the bank has accepted them. I've also submitted offers for clients to have them denied, and then 5 weeks down the road the property is selling for less then our original offer price. Make sure you've done your due diligence too.

If you're using a licensed agent in the transaction make sure he has a positive attitude and understands the market. One's tone, or as to how he submit's the offer can sometimes destroy the offer before it's even submitted if he has a negative outlook.
Old 03-03-2009, 01:54 PM
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Originally Posted by Eastbound View Post
... If you're using a licensed agent in the transaction ...
I am going to recommend you NOT use a real estate agent, licensed or not. Buying a house is a contract decision. No one knows more about contracts than real estate attys. Pay for an atty by the hr for his/her services/advice, and knock another 3% off the cost of the porperty -- the commission the bank would have been giving to an agent. It should more than cover the cost of an atty.
Old 03-04-2009, 04:54 AM
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Originally Posted by Eyeball View Post
I am going to recommend you NOT use a real estate agent, licensed or not. Buying a house is a contract decision. No one knows more about contracts than real estate attys. Pay for an atty by the hr for his/her services/advice, and knock another 3% off the cost of the porperty -- the commission the bank would have been giving to an agent. It should more than cover the cost of an atty.


EYEBALL, PLEASE READ.... Ok, first off.... The selling side of a real estate transaction pays the commission 90% of the time unless I'm hired by an individual to write an offer on a FSBO or go to the courthouse and bid on a foreclosure. Typically it's a 6% co-broke paid by the seller meaning I get my 3% from the selling side, not the purchaser.... Even if it's a bank owned property and they have it listed with an agent they still pay a Co-broke.

Currently we have 2 ways to buy foreclosures. #1 go through a licensed real estate agent, or purchase it at the courthouse. I have done both of these numerous times. When purchasing a foreclosure at the courthouse you don't need a contract!!!!! If you're not skilled enough to do this on your own, then you hire an attorney to run the title search for you, and to see if the property has any liens. Then you go and bid!! If you purchase it through a real estate agent they will have a state approved contract that was written by ATTORNEYS to protect everyone that is involved in that transaction. Also, 9 out of 10 times you will have to fill out another contract AKA: Addendum that the bank requires. The property will also be sold as-is more then likely so do your homework before bidding at the courthouse or entering into a contract.

Last edited by Eastbound; 03-04-2009 at 12:23 PM.
Old 03-04-2009, 08:37 PM
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Asking or higher. I recently bought two and got outbid on a couple others. All forclosures up in PA anyway bring in a half dozen offers within 48 hours. A letter from your bank showing you have the cash carries a ton of wheight in the banks decision. The realtor I deal with said most banks wont even look at an offer without that letter right now.

Last edited by barrell; 03-04-2009 at 08:40 PM.
Old 03-04-2009, 10:18 PM
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Originally Posted by Eastbound View Post
...The selling side of a real estate transaction pays the commission ...

And where does the selling side get the money to pay that commission?!? Hint: FROM THE BUYER!!! THE BUYER, NOT THE SELLER, PAYS ALL OF THE COMMISSIONS IN A TYPICAL REAL ESTATE TRANSACTION!!!

Also, and especially, if you buy any home AS IS you should use an atty, NOT A REAL ESTATE AGENT!!! Example:

I bought my first house "as is", started off using a real estate agent that told me "as is" means "as is". The selling agent said "as is" means "as is". I dumped my real estate agent, used an atty, immediate deducted 3% (the buying agent's commission) from the price, and learned that "as is" really means "as is except ...". Where I bought my house it is not legal to sell any house with a roof that is not weather tight. So my atty suggested the buyer keep $5k in escrow until the first major storm proves the roof is "weather tight". Instead, the seller just knocked another $5k off the price.

None of that savings -- 3% of the selling cost and the $5k for possible necessary roof repairs, would have been possible if I used a real estate agent. Neither of the real estate agents knew what they were talking about, or were colluding to rip me off.

DO NOT USE A REAL ESTATE AGENT!!! USE A REAL ESTATE ATTY, you will save money.

Last edited by Eyeball; 03-04-2009 at 10:21 PM.
Old 03-05-2009, 05:22 AM
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Eye - I think in your situation you had a bad RE Agent. Also, the day of the 6% commission is OVER for RE Agents.

One way to jump on a "foreclosure" is the short sale. This takes time with the bank but there are a lot of these happening right now. In any event, do you're homework, do a title search and check for liens.
Old 03-05-2009, 05:33 AM
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As a licensed real estate agent, I agree with Eyeball. NEVER EVER buy or sell real estate without the advice of a COMPETENT REAL ESTATE attorney. Florida has standardized real estate contracts, as does the Florida bar. however, if you're not in the real estate business, USE AN ATTORNEY. Believe me, just because someone has a real estate license doesn't mean they know what they're doing.

Many lenders use a real estate broker to market their products and remove them from the day to day hassle. Let them prepare the contract. Have your attorney review it. ALWAYS have YOUR attorney handle or review the closing.
Old 03-05-2009, 10:54 AM
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Eyeball,

What ever happened to the listing agent in that transaction? As-is means as-is, but that's the art of NEGOTIATIONS. Our SC contract states that all appliances, heating, air conditioning, electric and plumbing systems, fireplace/chimney, pool, spa shall be in good working order; their physical condition shall be subject to reasonable wear and tear which does not adversely affect the normal and regular use thereof. FURTHER, the structure shall be reasonably sound and the roof free of LEAKS at the time of closing. In a transaction like yours, I would of also advised you to hire an inspector. I advise all my clients to hire an inspector even on new construction. If the roof looked bad, then we would of asked for the roof to be fixed or money escrowed. Even though it was AS-IS per the listing agent.

Also, who do you think closes real estate transactions? A REAL ESTATE ATTORNEY

I see your point about the buyer paying the commission, but it does come from the SELLING side.
Old 03-05-2009, 11:52 AM
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Originally Posted by Eastbound View Post
What ever happened to the listing agent in that transaction? As-is means as-is, but that's the art of NEGOTIATIONS. ...
The listing agent got their 3% commission, as appropriate. There was no selling agent so that 3% was refunded back to me, the buyer, tho the listing agent made a grab for it claiming she entitled to it even tho she did nothing for me (the buyer) simply because there was not a buying agent. That did not happen. The atty cost me less than 1%, the other 2% went into my pocket.

"As is" is decided by prevailing laws where the home is bought. My point is that most of us do not know what those laws are. Even real estate agents may not know the "as is" laws. A real estate atty would. So someone buying an "as is" house with known problems may not be aware the seller could still be responsible to fix those problems EVEN IF the home is sold "as is", even after the sell closes. It has nothing to do with negotiating, every thing to do with knowing the law.

You brought up "negotiations"; I've said this before, there are two areas in which lawyers really prevail, really have value, really earn their keep -- one is doing contract review, and the other is doing negotiations. Buying a house is contract review and negotiations.

When you are moving to a new area, need to find a house, need to know the schools, shopping, local services, public transportation ... that kind of stuff, you need to hook up with a real estate agent. When it come time for money to change hands, to actually buy a house, it's time to get a lawyer involved. Buying anything out of the norm (foreclosures, probate, short sells, etc) someone would have to be a fool not to use a real estate lawyer.

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