Verified answer

I bought a couple of bank-owned or real-estate owned (REO) homes that had been foreclosed upon in MD in a "hot" market a few years ago. In the first case I offered their asking price (which in hindsight was too high) and in another case I offered about 79% of asking (and in hindsight I could have gone down to 65% of asking and probably still had my offer accepted).

At that time, banks were trying to be more aggressive in their list prices because the market was hot, but they still took less than asking when the house had been on the market for awhile or wasn't in a prime neighborhood.

The price of $109k doesn't convey enough information. Also consider comparable sales, the days on market, the # of similar homes on the market in the same area, the condition of the property, and the terms the bank will accept (many bank-owned properties are sold "AS-IS" with few contingencies) versus the terms other sellers will accept. All of those competing factors could drive your offer down or up, depending on how they shape up.

I don't think that foreclosures have been negotiable in the past, but given the current situation you may have that option.

Right now the talk about stopping many of these foreclosures is negotiating an attainable price/loan amount that the borrower can maintain. In a foreclosure/short sale, the bank is looking for the "liquidation" value of the home, or the amount of cash necessary to cover their losses. If you can offer them more than that, you might be able to keep your home. You are both in a tough spot and would both be best off to reach an agreement. The bank needs the money and most likely wont get it in the market today. You need the house and probably don't have the means to get a new one, if you do lose it in foreclosure.

Once a foreclosure has started you are on a clock. You have a limited amount of time to resolve the situation before someone else buys it. The time frame and proceedings differ by state.

If you would have asked this same question about a year ago I would have had a simple one-word answer. NO.

The market today is a completely different animal. Builders are offering seller concessions, lenders are helping homeowners negotiate short sales and government is opening our grand-kid's wallets to make it all happen.

My answer is this. Find out what similar properties being foreclosed on and sold in short sales are going for in the area. Do a little research and find how much bad paper the bank who owns the property is holding. Times are desperate for these fat-cats and they need to liquidate. You are in the catbird seat. Get at lease 10% reduction off of the price that are asking.

One word of caution; Foreclosures are a tricky animal. Get a lawyer who knows the foreclosure market. The last thing you want to find comes with your new home is an extra $100k in tax liens.

Good Luck!

Banks are going to be getting pretty desperate in a very close future. They have to by law have a set amount of money in the bank to hold and maintain this properties. However, most banks will like to get the most that they can but if you can prove to them that the house that you are looking to purchase will be sitting there for months to come than they may be pretty open to the idea, but you must have solid proofs.

Get a list of foreclosed and pre-foreclosure properties around a .5 mile radius of the property that you are looking to buy, have a solid pre-approval letter to show that you are a strong buyer and are ready to close in a short period of time.

Do your due diligence on the property, there may be liens on the property that you may not know about and will have to get settled before you can re-sell the property again.

I've been in real estate for a while and if you are looking to break into it I can help you, perhaps we can partner up and get you going in a great career. If you have any more questions or concerns, please feel free to contact me at [email protected]

Some negotiation is possible, but generally lenders know the approximate market value of their REO properties, and list the sale price accordingly.

You need to determine current market value of the property in question. If the asking price is in line with that value, don't expect a great deal of negotiating room.

You should try to make your best offer always. Especially if you really want the house. However, you must understand the mentality of the lenders, they aren't emotionally involved. They only know what their bottom number is and if you don't hit it, you may not get it. Also, be prepared to wait patiently until they can decide if they like your offer. And don't expect them to repair anything!