Can I Lowball the bank?

[HairyUpperLip]

Background - Me, Wife, and baby (16 mo) live with my parents while looking for a home.

Home -
Asking price: $154,900
4 bed, 2.5 bath
1930 sq ft
Home built in 1992
Fairly decent schools
Similar homes in neighborhood selling for $180-190k


Was initially told by the realtor we are working with that the house is a short sale. Ran into her the other day and she said she found out the house is actually a "pre-short sale" if we wanted to try and make a lower offer.

The house needs some stuff, here is what I know for sure -
needs a stove and range
needs a fridge
ac unit is original (1992) - not sure if it works?
furnace is probably original too - not sure if it works? 
hardwood floors downstairs are mismatched
needs new carpet upstairs
and all the walls could use paint

My guess is at least $15k in work.


So my real question is -
What's a realistic lowball offer I can make on the house? My realtor suggested offering 140, but I really want to try and offer 125-130.
I don't want to insult my Realtor or make her look stupid by offering something pathetic. We have no urgency to move, so I don't care if they reject it/don't counter. Anyways, any thoughts on how to approach this without offending her?

Thanks.

Update - Made the offer the next day after making this thread for $130k. My agent called to make the offer and was told the property has an offer on it. The property is listed as Active on the listings, so not really sure what's the status?.

[ShoulderThingThatGoesUp]

Always worth a try. Doesn't mean that it will work. However, it sounds like a pretty good deal already.

[Bobberth]

It's hard to say with it being a short sale.  Depends if the owners have approached the bank about doing a short sale or if your offer will be the first time the bank becomes aware of the house being sold short.  If the bank is aware of the short sale, they are also aware of BPO and how long the house has been on the market for that price and that it has been rejected at that price for X number of months so they obviously need a lower price.  If it's the first time the bank has heard about a short sale, they will need to run comps and qualify the owner for a short sale.  It can take a long time.  Very long time. 

I have made several offers on short sales for investment purposes.  Some banks you can negotiate price.  Some banks will come back with their lowest amount they will take.  Some times it ends up in foreclosure and sells for a higher price.  Some times it sells for a lower price as a foreclosure.  It's worth a shot to find out.  Just know that if you're looking at a short sale for a place for you to live, I wouldn't expect it to be closed in less than 3 months and possibly take up to 6 or more months depending where property/owner is in the short sale process.  And that doesn't take into account any amount of time for you to obtain a loan.

[HairyUpperLip]

Always worth a try. Doesn't mean that it will work. However, it sounds like a pretty good deal already.

It is pretty decent to be honest, but it's not a perfect house so it'll take some work/money.

It's hard to say with it being a short sale.  Depends if the owners have approached the bank about doing a short sale or if your offer will be the first time the bank becomes aware of the house being sold short.  If the bank is aware of the short sale, they are also aware of BPO and how long the house has been on the market for that price and that it has been rejected at that price for X number of months so they obviously need a lower price.  If it's the first time the bank has heard about a short sale, they will need to run comps and qualify the owner for a short sale.  It can take a long time.  Very long time. 

I have made several offers on short sales for investment purposes.  Some banks you can negotiate price.  Some banks will come back with their lowest amount they will take.  Some times it ends up in foreclosure and sells for a higher price.  Some times it sells for a lower price as a foreclosure.  It's worth a shot to find out.  Just know that if you're looking at a short sale for a place for you to live, I wouldn't expect it to be closed in less than 3 months and possibly take up to 6 or more months depending where property/owner is in the short sale process.  And that doesn't take into account any amount of time for you to obtain a loan.

Thanks. We do have the luxury of time on our side as the house is really like a mile from my parents and we aren't in a hurry to leave (my wife may think otherwise, heh).

So anything is possible, lolol. sounds like my realtor just has to do what I ask, just want to make sure I don't offend her or anything stupid.

<--first time home buyer.

[pzxc]

The realtor works for YOU.  She is getting paid a commission that is coming out of the purchase price that YOU are paying. Why in the world would you worry about offending her?

You're going to pay MORE because you don't want to hurt the feelings of somebody who is supposedly working for you?  Maybe thousands of dollars more?

Are you worried about hurting the bank's feelings too for making an offer too low?

[HairyUpperLip]

The realtor works for YOU.  She is getting paid a commission that is coming out of the purchase price that YOU are paying. Why in the world would you worry about offending her?

She's a good friend of my FIL, just wanted to make sure their wasn't any etiquette to any of this.

You're going to pay MORE because you don't want to hurt the feelings of somebody who is supposedly working for you?  Maybe thousands of dollars more?

The original price was $154,900 firm, now it's open to offers. Anything under 154 is paying less in my opinion.

Are you worried about hurting the bank's feelings too for making an offer too low?

I get your point, but I was just asking so I can be respectful towards other people - thanks for the input!

[pzxc]

Sorry if I was a little too facepunchy.  My point is that you are doing just as much a favor to her (as she will get paid from your money) as she is doing for you.  Thus, you shouldn't let personal feelings influence your business decisions.

[Blindsquirrel]

lowball away, costs nothing. could gain much.

[James]

First, be very careful with a realtor that is connected to your family. Might be helpful, might hurt, just be careful. I don't trust realtors at all, so I ignore everything they say and just figure out my plans on my own and have them implement the plans. I suggest that route, listen respectfully, but don't let her sway you in what your plan is.


I would go with the low offer. If they are insulted they will likely not respond at all. If they are not insulted but think it is way too low, they will respond with full price counter, which is how I respond to a low ball offer. Either way you learn something about the bank and get something out on the table. It gets them looking into the house and figuring out where they are in it. I don't see a down side of a low offer to a bank, it is all play money to them, nobody is personally out money so feeling are less relevant.


Once you get the bank interested, make sure you get an inspector in the house early. I wouldn't wait for an accepted offer, I would bring an inspector in during a visit and have them look things over. It is easier to find problems and negotiate a lower price before having an accepted offer, than trying to lower the price after an accepted offer based on the inspection. And better to know really well what you are getting into. (If you don't want to pay an inspector, find a carpenter/contractor you can trust, anyone who knows houses inside and out and can double check for things you miss and help give rough numbers for repairs)


Best of luck, sounds like a great possibility!

[ShoulderThingThatGoesUp]

I've made offers on two REO properties, so take the experience for what it's worth, but in both cases they claimed to have another buyer that I'm not sure really existed. My realtor at the time didn't believe them either.

[Fishingmn]

On a short sale you can offer anything you want and the seller can accept your offer but that number means little.

The bank will conduct its own BPO (broker price opinion - an independent appraisal) to determine whether they accept it. If your offer is much below that number they will counter offer to a price that may be much less appealing. Just be prepared to wait 1-6 months to find that out.

Bottom line is that it might work but if your offer price is really much below the market they will likely reject it months after the seller accepted.

[Goldeneer]

Put in a low offer that you think is acceptable and will be countered. Don't worry so much about your real estate agent's reputation.

It has taken me a long time to find a good agent after 7+ transactions. My last agent didn't want to represent me when I wanted to make a low offer on a property that were asking way too much so I dropped her and found a much a better agent.

I don't believe in making continuous low ball offers as I think that wastes everyone's time but I will make a low offer if I think the house doesn't show well or is highly overvalued.

[SpicyMcHaggus]

I find your estimate for work far overvalued.
Yes, you can lowball a short sale, but you risk not even getting a response.

The house needs some stuff, here is what I know for sure -
needs a stove and range (this is one item- $200-300 on craigslist for a nice one)
needs a fridge ($300-400 on craigslist)
ac unit is original (1992) - not sure if it works? (purchase from home depot via a contractor friend who does HVAC. they are much cheaper)
furnace is probably original too - not sure if it works?  (same as above. new furnaces are under $2000)
hardwood floors downstairs are mismatched -  deal with it for now, read books on how to fix
needs new carpet upstairs - DIY or purchase and hire carpet guy for cash. I got 4 rooms and stairs done for $1000.
and all the walls could use paint - do this yourself.

I would say you can fix it up WELL under $8k

My guess is at least $15k in work.

[HairyUpperLip]

Sorry if I was a little too facepunchy.  My point is that you are doing just as much a favor to her (as she will get paid from your money) as she is doing for you.  Thus, you shouldn't let personal feelings influence your business decisions.

You're good man, I understand where you are coming from with it.

Best of luck, sounds like a great possibility!

Thanks man, I appreciate all the advise you posted.

I agree, I already told my wife I wish we had a Realtor that wasn't connected to the FIL. Only perk is he will get 50% of the commission. He said he'd give these funds to us, but I already told him to keep it.

I've made offers on two REO properties, so take the experience for what it's worth, but in both cases they claimed to have another buyer that I'm not sure really existed. My realtor at the time didn't believe them either.

Exactly what happened to us. My agent called to make the offer and was told the property had an offer on it. Still shows Active on the listings though...

On a short sale you can offer anything you want and the seller can accept your offer but that number means little.

The bank will conduct its own BPO (broker price opinion - an independent appraisal) to determine whether they accept it. If your offer is much below that number they will counter offer to a price that may be much less appealing. Just be prepared to wait 1-6 months to find that out.

Bottom line is that it might work but if your offer price is really much below the market they will likely reject it months after the seller accepted.

Thanks for the info man. Appreciate it.

Put in a low offer that you think is acceptable and will be countered. Don't worry so much about your real estate agent's reputation.

It has taken me a long time to find a good agent after 7+ transactions. My last agent didn't want to represent me when I wanted to make a low offer on a property that were asking way too much so I dropped her and found a much a better agent.

I don't believe in making continuous low ball offers as I think that wastes everyone's time but I will make a low offer if I think the house doesn't show well or is highly overvalued.

Totally agree, this was the only time were I felt like it was worth the lowball offer to be honest.

I find your estimate for work far overvalued.
Yes, you can lowball a short sale, but you risk not even getting a response.

The house needs some stuff, here is what I know for sure -
needs a stove and range (this is one item- $200-300 on craigslist for a nice one)
needs a fridge ($300-400 on craigslist)
ac unit is original (1992) - not sure if it works? (purchase from home depot via a contractor friend who does HVAC. they are much cheaper)
furnace is probably original too - not sure if it works?  (same as above. new furnaces are under $2000)
hardwood floors downstairs are mismatched -  deal with it for now, read books on how to fix
needs new carpet upstairs - DIY or purchase and hire carpet guy for cash. I got 4 rooms and stairs done for $1000.
and all the walls could use paint - do this yourself.

I would say you can fix it up WELL under $8k

My guess is at least $15k in work.

Thanks, I agree your numbers reflect what I was really seeing on my local CL as well.

[HairyUpperLip]

Update - Made the offer the next day after making this thread for $130k. My agent called to make the offer and was told the property has an offer on it. The property is listed as Active on the listings, so not really sure what's the status?.

[SpicyMcHaggus]

It's a short sale. They are notorious for lack of response, delayed listing changes, slow counter offers, etc. I would suggest you look for other properties, as it seems someone has beaten you to this one.

[ShoulderThingThatGoesUp]

Update - Made the offer the next day after making this thread for $130k. My agent called to make the offer and was told the property has an offer on it. The property is listed as Active on the listings, so not really sure what's the status?.

So is the offer actually made, or not? If the offer is made then you are stuck until their period to respond ends, no matter what they said on the phone.