How low can I underbid? (house buying)

[lolBST]

Looking for advice from anyone that has gone through the house buying process lately, since me and the woman are getting ready to buy our first home by the time our current lease ends.

The home we are looking at is a 2 story, 4 bedrooms+loft on the second floor, with dining/living/kitchen/garage on the ground floor, somewhere around 3000 square feet. House was built 5 years ago and is in the process of being foreclosed on by the bank. House was valued at 209k 5 years ago, and the owners did a crapload of improvements to it, estimated at 90k worth of improvements.

Current listed price is 169,500, going to look at a couple more places this week, but probably going to put down an offer in about 2.5 weeks provided no one snatches it up before then. My thought is to do the offer for 150k and see where it goes since the market is in the shitter right now. Anyone bought anything lately and can give me any advice on if that might be a tad low, or not low enough?

[guartz]

If it's bank owned, it will take forever to process and the bank will pick the highest bidder.

[FNH]

not gonna be much leeway with foreclosures.

[Soa]

I put some bids in on a couple foreclosures before I bought my house and the banks rejected all my lowball offers. You might be able to get away with a couple thousand below asking price but don't hold your breath.

[pohibaba]

Offer the price that you think is most fair. If they don't pick it, oh well, you didn't overpay for the house. The worst thing you could do is to fall in love with a house and be forced to overpay.

[kyod]

When it comes to a bank-owned property, it's not even worth it to waste the time/paperwork to low ball or, "offer what you think is most fair" (unless the area is shitty and the bank wants to get rid of the property asap or the neighborhood has tons of foreclosed homes already). Since this home is a relatively new construction and had 90k worth of remodels, the bank will not accept anything less than the asking price.

[lolBST]

Well, the community has a ton of other homes on the market, i'd say probably close to a dozen we saw driving in, and the place is huge, so probably more like 30 total at least. Unless we find something good on Friday looking in another area, gonna shoot them one for 150k in a couple weeks and worst case, I get a counter offer saying they can't drop below the 169k asking price.



I figure if I make the offer now BEFORE it goes into foreclosure, they might take a lesser offer, since I assume foreclosing takes a bit of money for paperwork and all.

[Senji]

Picked up a single story ranch house to use as a nice rental property last year. They were asking 160, paid 100, half closing costs, and made them leave the 700 gallons of oil in the underground fuel tank.

[archibaldcrane]

I'm looking too, house buying in LA sucks, shit is fucking expensive even with the bubble burst. 4 bedrooms don't exist outside of Compton for under 300k.

But yeah, from everything I've heard, there's very little negotiation on foreclosed properties (especially if you are financing - straight cash homie has a little more leeway). Is it listed by the current homeowners or is it listed by the bank?

Also, this is a question for your agent.

You do have an agent...


...don't you?

[Ksandra]

oddly enough, going house hunting after we get our tax refund back (every bit of down payment helps!) was going to ask a similar question.

for those posting, what about non-foreclosure homes?


we won't limit to either, and sadly most on the market are foreclosures, but not all, so I want to be able to weigh my options if we find one that isn't. (esp, since I want to go for an older home as it is. older home = more yard in socal)

[Takedown3]

no idea on foreclosures but if you find a place that you know hasnt had a lot of viewings (your agent can find this out) then you should offer much lower the the list price just because they could be desperate to sell. Even if they are insulted with your offer they will most likely do a counter offer under their original list price which you can continue to counter offer until you reach a price you are comfortable with.

[Amelya]

oddly enough, going house hunting after we get our tax refund back (every bit of down payment helps!) was going to ask a similar question.

for those posting, what about non-foreclosure homes?


we won't limit to either, and sadly most on the market are foreclosures, but not all, so I want to be able to weigh my options if we find one that isn't. (esp, since I want to go for an older home as it is. older home = more yard in socal)

It really all depends on the house itself IMO. How long it's been on the market, how it compares to homes sold around it, how many viewings it's had, how much the people want to sell, location, etc. Your agent should be able to help you with all those things.

When we were looking last year there were a couple of houses that we didn't even get to view because there was an accepted offer on it the day it was listed. My house sold in one day as well. So even though the market is relatively slow, there are people buying. My new house was listed for 232k I think, we low balled it at 204k because it had been sitting for ~6 months, they were insulted (lol) but still countered back at 218k and we accepted. They easily could have just dismissed our offer though. At that point we had already looked at 100+ houses, so while we really liked the house, we wouldn't have been totally heartbroken which is why we took the chance on a low offer.

As far as homes about to go into foreclosure, some people won't take low offers because it doesn't cover the cost they still owe on their mortgage. And if it's already bank owned it's probably not worth your time to low ball it.

[kyod]

As far as homes about to go into foreclosure, some people won't take low offers because it doesn't cover the cost they still owe on their mortgage.

And if it's a short sale, there is very little (if at all) room for negotiation on the price.

[Khajit]

If you find property with a real estate agent in charge of the sale even the agent will underbid FOR you to get the sale out the way. The Agent is really only after a quick sale instead of what's best for their client. The agents when selling their own houses tended to get 50~100k more per house on average before the housing market collapsed I think.

[FNH]

I get a counter offer saying they can't drop below the 169k asking price.

If it's a FHA foreclosure that falls onto HUD, they just cancel your bid now.

[Dantrag]

For making offers on houses your agent should be telling you what all the other properties in the area sold for and give you a sq ft cost per house. You can then use that to base what the cost of the house should be for the size. So if 3x houses sold for 100 sq ft in the area you can expect to pay something similar depending on the condition of the house. Some neighborhoods have a cap on how much a house can realistically sell for in that neighborhood despite upgrades.

[lolBST]

The 169k would put it at the high end for the neighborhood, we looked it up some more last night and found it had dropped 8k asking price a week ago. It's bank owned, but a short sale, so not into foreclosure yet. Still gonna figure on putting a bid in for 150k and if they come back saying they cannot go under 169k, we'll probably take it for 169. I figure at least we can get some of the closing costs covered if they leave it at 169k, or if I do the mortgage through the bank that owns it, rather than my own bank.

[lolBST]

The house kinda came out of nowhere too and is in the high end of what we wanted to pay (170k was our ceiling). There are houses that are still pretty damn good in the neighborhood for 140k, but if I can steal this sucker am gonna do my best.

[Dryr]

gonna shoot them one for 150k in a couple weeks and worst case, I get a counter offer saying they can't drop below the 169k asking price.

Bank owned (especially foreclosure) are a nightmare for actual home buyers. Forget about counter offers, even dropping an offer over asking price can result in no response... The fact is, bankers forced to handle foreclosures hate them. They get to know a relative few number of landlords/investment buyers that can make the process hassle free for them and they will accept/decline a deal over the phone before they even look at your written offer that has been sitting on their desk for weeks.

I don't say this as a bitter shopper, just someone who knows what the business has become due to the flood of properties that are shoveled on to the workload of bankers that would rather be doing "real" banking...

[Coren]

One of you househunters come buy the house at the entrance to my neighborhood that has been looking scraggly while sitting on the market for 3 years. Ugh.