So you finally found the house you want. Maybe it’s not in the best condition but the location is perfect and the price is just unbelievable. The home has only been on the market for 3 days and the best part of all…..it’s a bank foreclosure!
Now, you’re standing in the kitchen discussing the process of making an offer with your agent, and the next thing you know another car pulls up. It’s a Realtor who’s there to show the property to her clients too. No big deal right? You casually walk outside with your best poker face on. You talk about how the house is just “ok”, but would need waaay too much work. Then once you’re back in the car you tell your agent how you really feel - “I WANT THAT HOUSE!”.
The fact is, the main reason you want the house is because it’s priced well below what it’s worth. And let’s face it. You’ve seen several other homes that you like. Even in that same area and they’re in better condition. Only they have one flaw…, they want fair market value.
So How Do You Determine the Right Offer Price on a Foreclosure?
Especially when you know it’s highly probable that you’ll be competing with other offers.
The answer is simple…
Choose an offer price which will allow you to feel completely, 100% REGRET-FREE if your offer does not get accepted.
What is the price that will leave you ECSTATIC that your offer is accepted, or SINCERELY CONTENT with your decision if your offer doesn’t get accepted?
If you would be upset to discover that you were outbid by only $500, then your offer price is $501 dollars too low.
However, if the house sold for $100 more than the offer you sent, and you can be “ok” about it, then that’s the “best offer price“.
It helps to have your agent pull comparable “sold”, “active” and “under contract” listings. This should help you determine your “best offer price“.
“But W..i..l..l (whiny voice), what if the bank would take far less than what they’re asking, or what I’m willing to pay?”
The list price is a starting point. It’s a marketing tool that banks use to sell their properties. Sure, they wouldn’t list it at that price if they weren’t willing to sell it at that price. But their strategy is to stimulate enough interest that it sells within a fairly short period of time and for the most money possible.
It’s not uncommon for a bank owned, HUD or short sale to sell for 3-5% over the asking price. Particularly when they’ve set the price considerably below the other homes on the market.
And, sometimes, bank properties are not priced right. If they set the price of the property too high then it will likely sit on the market with little to no activity. In those situations, you can easily offer less than your “best offer price“. But if you think you’ll be competing, it’s best to use the first strategy.
Good Luck!
Hey!
Your blog is nice. Thanks for sharing this post.
I use the exact same tactic when writing any offer, including foreclosures. If the buyer feels ok with the offer, even though they don’t get the home, that is a great place to start. Great post!