Banking and Foreclosures
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From: In a van down by the river
Banking and Foreclosures
Hey Guys,
Anyone out there in the banking or foreclosure business? I'm in the middle of buying a house and looking for someone with industry knowledge to bounce some questions off.
Thanks,
Duke
Anyone out there in the banking or foreclosure business? I'm in the middle of buying a house and looking for someone with industry knowledge to bounce some questions off.
Thanks,
Duke
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From: Groveport, OH
I worked for a subprime lender for 1.5yrs and saw some of them and know alot about the market etc as I bought a flip house, whichthe owners lost money on due to the market but whatever lol
If you need anything PM me.
If you need anything PM me.
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From: In a van down by the river
Well I have been searching for a house and found one I like. Turns out it's a foreclosure. Then I went on the county website and found the Sheriff certificate for it and it turns out the Bank foreclosed on the property back in Feb 07 and the previous owner's 6 months were up in August 07. So it's been sitting on the market for roughly 110 days or so.
I also saw the amount the bank foreclosed upon. It was 70 grand less then what they're currently asking for the house. My biggest question is would it be possible to offer around the foreclosure price and have a chance of getting an acceptance?
Duke
I also saw the amount the bank foreclosed upon. It was 70 grand less then what they're currently asking for the house. My biggest question is would it be possible to offer around the foreclosure price and have a chance of getting an acceptance?
Duke
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From: Bakersfield, CA, USA
The listing price is based on what the bank thinks the current market value is. They could have obtained the listing price from a local broker who is overly optimistic, or they may be using out of date information. Or whoever set the price could be incompetent, or not knowledgeable about market conditions.
In terms of a national average, foreclosed properties usually sell for 20% less than comparable properties that are not distressed sales. But they often have some items needing maintenance, too. The range of discount a buyer can usually achieve is 10% - 25% compared to current, non-distressed comps (which may be much less than the previous sale price). If all the sales in an area are distressed sales, try to find out what they have been selling for recently. If there are no recent comparable sales, then the market could be really really bad.
I say make a lowball offer, especially if you are in a distressed market (it might help us if you told us where you live). Banks usually hate to hold property, especially when the tax bill or property insurance are due. The bank owes it to their shareholders to try and get as much as possible, but eventually they will sell at a loss if they have to.
If you really like the house and think it is overpriced, you could pay a local real estate appraiser $300 or so to give an opinion of value. If you have a broker, they can run a CMA (competitive marke analysis) for you. You could provide a copy of the appraisal or CMA to the bank with your offer. The appraisal would probably have better information than the bank used to set the price.
In terms of a national average, foreclosed properties usually sell for 20% less than comparable properties that are not distressed sales. But they often have some items needing maintenance, too. The range of discount a buyer can usually achieve is 10% - 25% compared to current, non-distressed comps (which may be much less than the previous sale price). If all the sales in an area are distressed sales, try to find out what they have been selling for recently. If there are no recent comparable sales, then the market could be really really bad.
I say make a lowball offer, especially if you are in a distressed market (it might help us if you told us where you live). Banks usually hate to hold property, especially when the tax bill or property insurance are due. The bank owes it to their shareholders to try and get as much as possible, but eventually they will sell at a loss if they have to.
If you really like the house and think it is overpriced, you could pay a local real estate appraiser $300 or so to give an opinion of value. If you have a broker, they can run a CMA (competitive marke analysis) for you. You could provide a copy of the appraisal or CMA to the bank with your offer. The appraisal would probably have better information than the bank used to set the price.
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From: S.E. Michigan
I bought another forecloser a few months ago. The lady originally paid 69k for the house, and lost it back to the bank. I went to the sheriff sale and pulled the file before and found the first note was for 53k, and the 2nd note was for about 10k and misc judgements against the home also. The first mortgage co. bought it for the opening bid, i just kept my mouth shut and left. I then waited for the mortgage co. to list it with a realtor. They had it listed for 48k, and i offered 20k, they countered, i didn't. I offered 20k each month, for about 4 months, then they finally accepted it.
This is my 3rd rental, and my 2nd foreclosed property. Remember the 3 D's.... Death, Divorce, Default. This is the only way to buy.
This is my 3rd rental, and my 2nd foreclosed property. Remember the 3 D's.... Death, Divorce, Default. This is the only way to buy.
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From: In a van down by the river
Thanks for the advice fellas. I'd tell you exactly where it is but I don't trust everyone on the internet, just a few.
The reason I think my offer of $70k less is acceptable is the following:
1. The home has completed it foreclosure cycle
2. It has been sitting in the bank inventory for 110+ days
3. They initially priced it $40k OVER what homes in the area sold for that are NOT distressed. Now it's come down to the same price as NON-distressed homes in the area.
4. Hard wood floors by powder room have very slight buckle to them. It looks to be from a possible toilet overflow but I can't be sure. I looked up from the unfinished basement at the sub floor and there is no water damage.
5. There a couple holes in the dry wall that are the size of half dollars from what looks like them moving furniture.
6. Sod and 1 tree but NO landscaping.
My realtor is saying to go in with an offer that is $40k less then they're asking price but I don't think that's accurate. He didn't know about the home across the street that was a foreclosure and just sold. Or the fact there is another foreclosure in the neighborhood and I don't think he's seen this sheriff's certificate.
I don't have anything I need to sell so I'm in the driver's seat here. I think I'll lowball them $20k under what the sheriff's cert says with the bank paying closing costs and go from there. I'll clue my realtor in on the sheriff cert to help justify to him why my offer is $50k less then what he suggested. I just want him to have the info he needs to be confident in passing my offer.
At the end of the day it's a REALLY nice house with a lot of nice features. It just needs to be polished up.
Let me know what you think.
Duke
EDIT: Just discovered the Sheriff's certificate that I found online was for the property across the street that foreclosed. I was off on the address. It's a dumb mistake but recoverable as I haven't made an offer yet. I keep looking online and can't find the Sheriff foreclosure info anywhere. Where else can I look for this?
The reason I think my offer of $70k less is acceptable is the following:
1. The home has completed it foreclosure cycle
2. It has been sitting in the bank inventory for 110+ days
3. They initially priced it $40k OVER what homes in the area sold for that are NOT distressed. Now it's come down to the same price as NON-distressed homes in the area.
4. Hard wood floors by powder room have very slight buckle to them. It looks to be from a possible toilet overflow but I can't be sure. I looked up from the unfinished basement at the sub floor and there is no water damage.
5. There a couple holes in the dry wall that are the size of half dollars from what looks like them moving furniture.
6. Sod and 1 tree but NO landscaping.
My realtor is saying to go in with an offer that is $40k less then they're asking price but I don't think that's accurate. He didn't know about the home across the street that was a foreclosure and just sold. Or the fact there is another foreclosure in the neighborhood and I don't think he's seen this sheriff's certificate.
I don't have anything I need to sell so I'm in the driver's seat here. I think I'll lowball them $20k under what the sheriff's cert says with the bank paying closing costs and go from there. I'll clue my realtor in on the sheriff cert to help justify to him why my offer is $50k less then what he suggested. I just want him to have the info he needs to be confident in passing my offer.
At the end of the day it's a REALLY nice house with a lot of nice features. It just needs to be polished up.
Let me know what you think.
Duke
EDIT: Just discovered the Sheriff's certificate that I found online was for the property across the street that foreclosed. I was off on the address. It's a dumb mistake but recoverable as I haven't made an offer yet. I keep looking online and can't find the Sheriff foreclosure info anywhere. Where else can I look for this?
Last edited by F150 Duke; Dec 4, 2007 at 10:34 AM.
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From: Bakersfield, CA, USA
Your realtor wants to offer a higher amount than you do because:
1) It is more likely to get accepted
2) His commission will be greater
Resist the temptation to make your realtor's life easier and do what is right for you. Have him present the offer YOU want to make, or get another realtor.
If you stick with the lowball strategy, be prepared to play the waiting game, as the lenders often have trouble pulling the trigger until they are convinced it is the best offer they are going to get. A higher up at the bank will need to sign off on it, and that can take time. 110 days on the market is not good, but in a truly distressed market, there could be over 20 months of supply available for sale, so they may be resigned to a long marketing period.
I would not worry about what the Sheriff's certificates say. It is good background data, but it has nothing to do with market value or the minimum amount the bank will accept today. In some cases, you may not be able to get the most recent public information on line; you may have to go view the recorded documents at the recorder's office during normal business hours. It may also be possible for the actual transfer price to be hidden, even if you live in a state that is supposed to have full disclosure.
The relative strength of local real estate markets varies dramatically. Some markets are really in the tank right now and will remain so for several years. Since we don't know where you are, it's impossible to give specific data. Wherever you are, if the market is bad, a qualified buyer such as yourself has abundant options. There are some great deals out there if you drive a hard bargain. It's generally not a good climate to 'flip' in since there are so few buyers, but if you intend to occupy it yourself or if the market is well located and will eventually turn around, it is a good time to buy and hold onto it for a few years. No hurry though. Be patient and find the right deal.
1) It is more likely to get accepted
2) His commission will be greater
Resist the temptation to make your realtor's life easier and do what is right for you. Have him present the offer YOU want to make, or get another realtor.
If you stick with the lowball strategy, be prepared to play the waiting game, as the lenders often have trouble pulling the trigger until they are convinced it is the best offer they are going to get. A higher up at the bank will need to sign off on it, and that can take time. 110 days on the market is not good, but in a truly distressed market, there could be over 20 months of supply available for sale, so they may be resigned to a long marketing period.
I would not worry about what the Sheriff's certificates say. It is good background data, but it has nothing to do with market value or the minimum amount the bank will accept today. In some cases, you may not be able to get the most recent public information on line; you may have to go view the recorded documents at the recorder's office during normal business hours. It may also be possible for the actual transfer price to be hidden, even if you live in a state that is supposed to have full disclosure.
The relative strength of local real estate markets varies dramatically. Some markets are really in the tank right now and will remain so for several years. Since we don't know where you are, it's impossible to give specific data. Wherever you are, if the market is bad, a qualified buyer such as yourself has abundant options. There are some great deals out there if you drive a hard bargain. It's generally not a good climate to 'flip' in since there are so few buyers, but if you intend to occupy it yourself or if the market is well located and will eventually turn around, it is a good time to buy and hold onto it for a few years. No hurry though. Be patient and find the right deal.
Last edited by dirt bike dave; Dec 4, 2007 at 11:15 AM.
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From: In a van down by the river
Originally Posted by dirt bike dave
Your realtor wants to offer a higher amount than you do because:
1) It is more likely to get accepted
2) His commission will be greater
Resist the temptation to make your realtor's life easier and do what is right for you. Have him present the offer YOU want to make, or get another realtor.
If you stick with the lowball strategy, be prepared to play the waiting game, as the lenders often have trouble pulling the trigger until they are convinced it is the best offer they are going to get. A higher up at the bank will need to sign off on it, and that can take time. 110 days on the market is not good, but in a truly distressed market, there could be over 20 months of supply available for sale, so they may be resigned to a long marketing period.
I would not worry about what the Sheriff's certificates say. It is good background data, but it has nothing to do with market value or the minimum amount the bank will accept today. In some cases, you may not be able to get the most recent public information on line; you may have to go view the recorded documents at the recorder's office during normal business hours. It may also be possible for the actual transfer price to be hidden, even if you live in a state that is supposed to have full disclosure.
1) It is more likely to get accepted
2) His commission will be greater
Resist the temptation to make your realtor's life easier and do what is right for you. Have him present the offer YOU want to make, or get another realtor.
If you stick with the lowball strategy, be prepared to play the waiting game, as the lenders often have trouble pulling the trigger until they are convinced it is the best offer they are going to get. A higher up at the bank will need to sign off on it, and that can take time. 110 days on the market is not good, but in a truly distressed market, there could be over 20 months of supply available for sale, so they may be resigned to a long marketing period.
I would not worry about what the Sheriff's certificates say. It is good background data, but it has nothing to do with market value or the minimum amount the bank will accept today. In some cases, you may not be able to get the most recent public information on line; you may have to go view the recorded documents at the recorder's office during normal business hours. It may also be possible for the actual transfer price to be hidden, even if you live in a state that is supposed to have full disclosure.
You're probably right on it's significance. I'm in the state of Minnesota near the Twin Cities so I'll just go off the national average of 20% of non-distressed homes.
Let's say that homes in the area that are non-distressed, have similar floor plans and sq. feet go for $115,000 in the current market. However, the current asking price is $127,000. This home is distressed with limited damage to the hardwood and drywall and you already know the other info. So an offer of $100,000 would be acceptable?
Given these numbers above are NO WHERE near what the actual price is. This is just a small number comparison of ratios to get an idea. I'm not comfortable listing the actual price.
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From: In a van down by the river
Does anyone have a subscription to any of the foreclosure websites? I found the house listed there and you have to subscribe to see more information. I'm wondering if they show what the home foreclosed for.
Duke
Duke