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How to negotiate effectively?

Offering really low on a foreclosure...how to negotiate?

  • The house started out at 85,000 in early december. (Which is the usual price for a medium size house in my small town.) It went down to 74,900 a month ago. The house is a huge fixer-upper both inside and outside, It has a REALLY weird layout, it's filthy and it's been neglected for quite some time and you can definitely tell. I don't really like the house but for the right price i could learn to like it.lol. I Love diy projects. I think the house could have some potential but i wouldn't miss it if i didn't get it. So i want to offer 55,000 to begin with. I won't go over 65,000 for it. It just isn't worth it to me! Will the bank negotiate? I guess my question is does the bank have a set price they won't go under? Does the bank negotiate like a a regular seller would? How would i negotiate with them? Can i tell them all it's faults? lol...

  • Answer:

    it is your job to make the case that the bank should sell for the lowest price. so, yes -- make a list of everything that will be needed to get the house into "ready to sell at full market" price. And I mean literally everything. Then price out that entire list at contractor prices [see Means Guides to Construction Costs in library for cost figures], including profit, 10% contingency, and interest on invested funds over the repair period. If it needs "a lot" -- it is sometimes easiest to assume that the entire interior will have to be gutted and completely redone. I've known rehab specialists who bid for properties on that basis, using $40 a square foot or more [depends on local labor market costs] as their cost estimate. 55k may well be TOO MUCH. Do your homework first like any sharp operator in the industry and you'll be a lot less likely to regret your decision later.

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The main thing about submitting your over,make sure the contract have a clause that gives you the right of first refusal. The other thing is make sure the listing real estate agent take your offer to the bank. Sometime they will tell you that the bank will not take such a low offer on this house. The reason they will give is that I made one awhile back and it was refused. Make sure they make the offer and if the bank is local tell them you want to be there when the offer is submitted. Itemize all the things that you find wrong with the property as well as the cost to repair the property. You might also submit pictures of the property both inside and outside. Anything is negotiable, so make your offer. If they come back with a higher counter offer there is nothing that say you can not resubmit your original offer. You do not have to accept the counter offer. I hope this has been of some use to you, good luck. "FIGHT ON"

loanmasterone

If the house is in really bad shape, and has not been up-dated, then pick a number and offer them that amount. You can always increase your offer, but you cannot go down. I have been told by banks that they will not negotiate, but they always do. This is just a spin to get as much for the house as they can. You would be in a stronger position if you can offer cash for the house. However, they may finance it for you if you have good credit. If the house is as bad as you relate that it is, and has been on the market for over 6 months, and looks crappy from the street, I would offer them $48,600 for it and see what they say. Banks do not like to own houses, as they require care, they are a tax burden and they are not set up to manage real estate. It is much easier for them to take a loss one-time and get rid of the house where possible. Loss allowances are built into the interest rates charged borrowers, and they do expect losses. Regards, Dan

Dan

It's a foreclosure. They don't care if Sasquatch has a lair in the basement. They have a number they need. Number may be getting lower every month; or not. Make the lowball offer. Play the rest by ear.

wizjp

they may go down but they do not care what the condition is any way. they just want to be made whole if they can on the note they hold

golferwhoworks

About foreclosure can be read in http://the-net-usa.blogspot.com/?q=foreclosure

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