First time home buyer trying to buy a foreclosure; I have a question about the seller/bank?
My husband and I found a great little home that we would love to purchase. It is a foreclosure and has been on the market for almost six months with only one low offer.
The house itself is not in great shape. It needs a lot of cosmetic work; paint, new flooring, new appliances, new doors both inside and out, new molding, and it is dirty! But it is in a great neighborhood with great schools and if you can see past the grime, it is a real gem.
We put in an offer and if you look at the neighborhood and what the other homes are selling for, it is a low offer. But we thought it was fair because of the condition of the house. The bank came back and agreed to pay our closing costs and to warranty the house but they want our max bid. They said our offer was a little low. They did not counter our offer and they did not say no to our offer, they just want us to offer a little more money. Per the listing agent, there are no other offers on the house.
Has anyone had an experience where the bank doesn't counter just asks for more money? And if so, how much more money should I offer? Is it possible that the bank does not know the condition of the house?
Thanks for reading this long question =)
- LandlordLv 71 decade agoFavourite answer
They have rejected your offer. Basically they are saying that you meet their criteria, you just low balled them. They will look at another offer.
Have your agent comp it for you and offer them no less then 90% of that amount, you are wasting your time low balling. They are not loosing anything with it sitting there as a write off.
- A DLv 51 decade ago
You don't say where the property is located, my comments are based on my experience in Austin, TX w/REO properties.
I think the bank is well aware of the property's condition and knows that the problems are cosmetic that should not be too big an impact on the price.
What does your agent suggest? You do have an agent representing you, right? Your agent should be able to do a comparable market analysis (CMA) and adjust for the cosmetic repairs needed if the comparable sales were houses in great condition. This should give you a good idea of the current market value of the house.
You don't say the list price, but if the seller-lender is offering to pay your closing costs and a residential service contract, add that to the current market value of the house based on your agent's CMA.
If you can pay your own costs, I would suggest counter-offer with 10% off current market value and pay your own closing costs. I suggest going for the smallest loan amount possible.
What does your agent recommend? Sounds like this house has it all - location, location, location.
Sounds like this property has been on the market for 6 months because of the local economy, right? If so, the bank should be fine with 10% off list price. You may even try for 10% off + your closing costs & residential service contract.
I'll bet they really want this house off their books by the end of the year. Can you close before the end of the month? If you can close with at least 3 business days left in the month, that may sweeten the deal enough to get you this house.
Good luck.Source(s): TX REALTOR
- Anonymous1 decade ago
Technically, they rejected your offer. They didn't accept it and they didn't counter-offer, they just said no but your free to try again.
In today's market, I wouldn't get too excited about any one property. There are tons of great deals out there and if you get your heart set on one particular house, you could end up paying too much.
The ball is in your court now. If I were in your situation, I would work with my realtor to contact the bank. I would try to get them to accept my original offer. I'd remind them of the condition of the house and say that based on the condition, the offer you made is the highest you are willing to go. At the most I'd add 2-3 thousand to my offer, but only if it looked like there was no chance of getting them to accept my original price.
Another option you could consider is to offer more but require the seller to set aside money at closing toward repairs. For example you might raise your price by $10,000 but at a clause that forces the seller to set aside $7000 of that extra money at closing, for you to use toward repairs. Ask your realtor how this works. Remember that once that money is designated, you can only use it to pay a licensed contractor, you can't use the money yourself to buy supplies for a do-it-yourself repair. Therefore you should only choose this option if you are willing to have contractors do the work for you, not if you are looking at this as a do-it-yourself project.
Another option is to simply wait. Come back in a month or two and make the same offer again. Tell the bank that the house is still in poor condition and you don't think its worth anything more than your original offer. Maybe the bank that's selling the property will realize that the house simply isn't going to sell for the price they are asking.
- RangerLv 71 decade ago
If they didn't counter, or accept, it is a rejection. You can walk away, or make a new offer at this point.
If you make a new offer, decide what the house is worth to you and offer that amount.
Never, Never, Never tell a realtor or anyone else what your max offer will be. If you do, you will get a rejection every time, or a counter offer for the max amount you are willing to pay. The more you pay, the higher the real estate commission will be for the selling agent.Source(s): 37 yrs. of buying and selling real estate.
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- SharinganLv 61 decade ago
I just went through this while buying a REO. They asked for my best offer and I went up $1000 and told them I was all in. They accepted the offer the same day. They are just trying to minimize their losses and get the most out of it.
It is entirely possible that the bank has no idea whatsoever of the condition of the property. In my area Realtors drive by the house and offer a price. They never go in to see the condition of the house.
- Anonymous1 decade ago
Some times its a ploy to keep an interested buyer on the line while they wait to see if another offer will come in. One thing to consider is what the asking price is compared to similar homes that have sold recently in the area. If they are asking a lot less then the condition is already factored in. The fact that the bank is willing to pay for closing costs and a warranty is pretty big. What they are saying is sure we will do this for you but we need this from you.
What type of financing are you using for your purchase? From your description it may not be in good enough shape to qualify for financing.Source(s): I'm a mortgage banker/broker licensed in all 50 states
- 1 decade ago
I`m in the uk, and things are done a little differently here.
But I should leave your offer on the table if you are not in too much of a hurry. Contact the bank occasionally to ask if the house is still available, or if they have reconsidered your offer. In the end they might be glad to offload it. I wouldn`t offer more.
- Anonymous1 decade ago
Sounds like a counteroffer to me. But if they did not counter your offer, then that's a rejection.