I recently read and answered a question on Trulia from someone not familiar with the Phoenix market asking how much under list price someone should offer for a foreclosure property. He thought that 10%-20% under list price may be appropriate.
Foreclosed bank owned homes are hot sellers right now. They account for a significant number of resales due to their attractive pricing. Submitting an offer under the asking price for a bank owned home is a usually a good way to not get your offer accepted. Many banks are pricing these homes under market value to drive interest and multiple offers. They want to see multiple offers that drive the price up, usually well over the asking price.
There are some exceptions. If the house has been on the market for weeks, and has been reduced in price, then you may be able to come in under asking. Either the home was overpriced to begin with or is in such bad shape that it will need a lower price to get someone interested.
The best thing to do is to look at recent comparable sales in the area in similar condition, focusing on bank owned homes as compared to “normal” listings. This will give you an idea of what may be fair value for the home. If the asking price is under fair value, then you should consider offering at least asking if not more. Be sure that your Realtor contacts the listing agent to see if other offers have already been submitted. In this situation you will need to offer your best price to compete with the other buyers. Other terms may help such as offering cash and a quick close.
For more information, see my article that reviews the process of buying a bank owned home.
You can click here to search for Phoenix area bank owned homes, or fill out my bank owned listings request form with details about the home you want and I will send you listings.
Photo courtesy of respres
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Best thing is do some research about the house your looking at. See what the houses on the street are worth and see if any have sold in the last couple months and for how much.
Over in San Diego, CA…we’ve been noticing bids coming in over the listing price by over 20K.
Susan, although $20K sounds like a lot, I suspect your prices are a bit higher to begin with in San Diego compared to Phoenix. From a percentage standpoint, it may be similar for bidding up bank owned listings. It’s definitely a seller’s market for banks.