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How much should I offer for this foreclosed home?

What to offer on a foreclosed home?

  • The home is question is a ranch, it is currently listed at $145,000 and is a forclosed home. What would you offer to purchase the home at?

  • Answer:

    My process is this: First I get comparables to find out what the Fair Market Value (FMV) of the home is both in "as is" condition and also after any needed repairs or remodeling is done. Sometimes the price of the property is discounted to show the "as is" price, but many times the seller is using the after remodeling price, or somewhere in the middle. Then, I have to make a decision based on my goals for the purchase. Am I buying it for a residence? To rent out? To fix up and sell (flip)? Assuming it is for an investment, I decide what I could rent it or sell it for, and work out nunbers to find out where the price/mortgage needs to be to get the profit I want out of it. With this information, now I can develop my price/negotiation strategy. I come up with three prices: Dream Price, Target Price and Top Price. Dream Price is a price and terms so low I don't even have to think about it, I will say DEAL! immediately. Target Price is a price I think is realistic. Top Price is the most I would consider purchasing the property for Then I craft a bid at or below my Dream Price, with the intention of negotiating towards my Target Price. If I think it is appropriate, say a bank owns the property and they are asking too much for it (often happens) I will include inspection reports, remodeling estimates and photos with my bid to make sure they have a good idea of what is going on. If there appears to be a willingness to negotiate, I'll do what I can to get it done. But also realize that just because it is a foreclosure doesn't mean it is a good deal. it is a buyers market, so don't think in terms based on their selling price. Do your homework for the property, the neighborhood the local real estate market and your investment goals. Work from there. If the seller isn't interested in meaningful negotiation, be ready to walk away. But keep in touch. There have been several times I walked away from a transaction because the seller wasn't interested in my price and terms. However a few weeks later they changed their mind. Hope this helps

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The ONLY way for you to come to a real assesment of what you should offer and what the home is really worth is to consult a Realtor or Loan Officer that has access to public records. They can find out what lagitimate sales have been for "like" homes in that area. With that information and the condition of the property, you can decide what you think would be a "fair price" for this property. There are inspections you can pay to have done on the property also(probably a good idea considering the property use) to help you argue the price of the property.

xander

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