Author Topic: How low to offer on a distressed property in foreclosure?  (Read 1984 times)

leevs11

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How low to offer on a distressed property in foreclosure?
« on: October 21, 2016, 11:53:38 AM »
I've had my eye on a distressed foreclosed property.  The home is on a 4 acre lake lot in a remote, yet touristy town.  Comparables would sell for around 500K. 

This one is listed at 187K by the bank. 

How likely would they go for 100?

srob

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Re: How low to offer on a distressed property in foreclosure?
« Reply #1 on: October 21, 2016, 12:23:13 PM »
It depends on the bank. I know some that like to keep their properties and when they do sell, they want top dollar. Some will negotiate, others will not budge. A small bank might be more willing to dicker.

leevs11

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Re: How low to offer on a distressed property in foreclosure?
« Reply #2 on: October 21, 2016, 12:40:41 PM »
It needs a ton of work.  Basically a gut job.

leevs11

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Re: How low to offer on a distressed property in foreclosure?
« Reply #3 on: October 21, 2016, 01:12:36 PM »
I think it's an interesting property.  Haven't done an inspection, but going into it there are some pretty big things that need to happen. 

The heating system was radiant and had ruptured pipes from freezing.  So I'd assume it would need a fully new heating system.  Which might be worth doing anyways because it was probably put in 50 yrs ago.  I'd also assume that plumbing would need to go as well.  It is a 2 bath + 1.5 kitchen place so this isn't a small thing. 

Other than that, it needs full bathroom remodels and at least a partial in the kitchen.  The cabinets were decent, but the rest probably needs to be torn out. 

Then all flooring needs to go.  Although a lot is already gone. 

I'm sure there are other things as well. 

I don't know, but it seems like the actual structure and foundation are fine. 

Overall it's a big big project, but there is some potential if I could get it for 100k or less I think. 

MNrealtyguy

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Re: How low to offer on a distressed property in foreclosure?
« Reply #4 on: October 22, 2016, 04:06:05 PM »
How long has the property been on the market?
My experience is that banks generally won't entertain a substantially lower offer within the first 30 days on the market. Also, sounds like a cash offer will be required based on the condition. Sounds interesting though if the after repaired value is around 500k. You may want to just keep your eye on it if you think it's overpriced and it hasn't been on the market long. Good luck!

Drifterrider

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Re: How low to offer on a distressed property in foreclosure?
« Reply #5 on: October 24, 2016, 05:02:35 AM »
I've had my eye on a distressed foreclosed property.  The home is on a 4 acre lake lot in a remote, yet touristy town.  Comparables would sell for around 500K. 

This one is listed at 187K by the bank. 

How likely would they go for 100?

It all depends.  You can always offer.

How long on the market?  It the price point set there to spark a bidding war?  I recently lost out on a house listed at $21,000.  It was ugly but habitable. 

Second, are you paying cash?  Lots of banks won't loan on that type of property (I've read further down/up where you mentioned a gut job).

You can always offer.  They can always say yes or now.

leevs11

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Re: How low to offer on a distressed property in foreclosure?
« Reply #6 on: October 24, 2016, 07:54:06 AM »
It's been on the market for 6 months.  It was originally listed at 325K in April.  Been steadily dropping since. 

How does that work with the cash only?  If this were the case, I think I'd be out of luck. 

I think "total gut job" is a bit of an overstatement.  It needs work on the plumbing, heating systems, bathrooms, kitchen, floors, but structurally seems to be alright.  Are there any specific rules on what can and cannot be financed?

Thanks

Drifterrider

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Re: How low to offer on a distressed property in foreclosure?
« Reply #7 on: October 24, 2016, 09:59:50 AM »
It's been on the market for 6 months.  It was originally listed at 325K in April.  Been steadily dropping since. 

How does that work with the cash only?  If this were the case, I think I'd be out of luck. 

I think "total gut job" is a bit of an overstatement.  It needs work on the plumbing, heating systems, bathrooms, kitchen, floors, but structurally seems to be alright.  Are there any specific rules on what can and cannot be financed?

Thanks

With a cash offer it only means you have the money to buy the property without a loan (not that you are bringing cash to closing).  If you have sufficient money to make the down payment and repairs, a bank might be willing to work with you. 

I would try and find a lender willing to work with me before I made offers.

MNrealtyguy

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Re: How low to offer on a distressed property in foreclosure?
« Reply #8 on: October 24, 2016, 10:39:53 AM »
It's generally harder (at least in my area) to get loans for properties like this if you're not going to live in it, which is why I think it will have to be cash. There are rehab loans banks offer, where you can escrow the amount of repairs and the estimated costs get added to the loan, but that product may not be available for non-owner occupants though. I recommend sitting down with a good mortgage broker that works with investors. If it has to be cash, maybe look at pooling some money together with like-minded friends.