How Much Should Be Offered For Bank Reo Foreclosures?
Most homebuyers believe that bank REO foreclosures are the safest forms of foreclosed properties
. This is, in some ways, true. However, getting an offer accepted might not be as easy since a lot of investors are interested in these properties and a regular home buyer can find himself competing against a handful of better offers. To improve one's chances of getting accepted, the offer price should be just about right.
Keeping a Balance
The offer price should not be too low that the bank will not even look at it. At the same time, it should not put too much strain on the buyer's personal finances. The acceptable offer price is usually 20% below prevailing market rates. To get that amount, a buyer should research the average prices of similar homes in the neighborhood and make an offer that is at least 20% lower.
Another useful formula is to come up with an amount halfway between the average market price for similar dwellings and the asking price for the bank REO foreclosures being sold. A buyer should provide enough flexibility to his offer since it is likely that the first one would be rejected. If he really wants the property, he should have a ceiling price that will allow him to go a bit higher and provide him with more room to haggle with the bank.
Additional Considerations
One way of getting an edge over other bidders is to have the payment cash-ready. Banks favor cash payments over other types of payments. If similar amounts are offered by multiple buyers, the one with the cash will likely get the property. A pre-approved mortgage package is another great negotiation tool to have when trying to acquire an REO property. It is to be expected that banks would require proof that the buyer will have the means to go through the whole process and pay for what he is expected to pay.
Making an offer for bank REO foreclosures entails a lot of work. For a home buyer, having an expert real estate agent is always an advantage, particularly if the agent has vast experience in representing buyers of REOs.
by: Joseph B. Smith
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