How much should I offer?
This is a tough question to answer without knowledge of the property, the price it is offered for,
the bank involved and the region.
As a general rule of thumb, offers will be entertained somewhere between 5-10% of the currently
listed price. In the case of multiple offers, bank owned homes can sell for well over their listed
price.
Hiring an experienced, local REO agent will be able to guide you in the right direction. Offering
far less than the asking price will not typically result in an acceptable counter or even a
response. There are situations that warrant a substantial difference between the listed price and
your offer. A good agent will guide you through the process and provide the information you
need before jeopardizing your future efforts.
Lenders and their asset managers price their homes according to their market indicators. By the
time the property is listed for sale, most will have obtained 3 BPOs (Broker Price Opinions) and 1
appraisal for a licensed real estate appraiser. 2 BPO orders and 1 appraisal will be completed in
advance of the listing being placed with an agent and 1 by the listing agent before a price is
ultimately determined. When listing a home for sale, the owner-lender has already done their
homework. You can agree with their homework and make an offer close to their asking price ( +-5
to 10% ) or, move on to the next property and save the frustration and potentially labeling
yourself as a “gamer”. Offering at far less than the current asking price, unless the home has
been on the market for many months and no activity, is typically fruitless. Even then, 50% off list
offers may do you more harm than good.
It is not unusual to see price drops on homes that have been on the market for some times to
exceed $100,000.00. Good agents will watch potential listings and have clients ready for a
potential, and significant price drop. When this happens, being the first to offer is your best bet to
securing the property. Don’t go in with the idea that, sine the price has been reduced that they
will now take even less. If you, and you agent, see a good deal, it is time to act.
Only an experienced REO Realtor, familiar with the area and local real estate market will be able
to guide you in the right direction when making an offer.
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Last Updated ( Saturday, 24 July 2010 )
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