I am currently bidding on a home owned by a bank. See house history below?
The home was purchase in 2006 for $360,000 and foreclosed in fall of 2007. The house was way overpriced for the neighborhood and no-one purchased the home at auction. The bank kept the home and was owed 285,000 from the previous mortgage.
Research on the neighborhood tells me that the home if it were in good working order would be around $230,000.
However, the lighting fixtures are gone ($700), the crawl space copper plumbing is stolen($3000), and around $10,000 worth of appliances, HVAC etc. are gone. I estimate about $15000 of repairs immediately. What is a reasonable sale price assuming these numbers are correct?
I believe that a 90% of the asking price minus cost of repairs which is estimated to be around 6.5% of the asking price so a final sale price of 83.5% of asking price seems reasonable.
Is this reasonable? How much should I expect the bank to budge?
Thank you in advance for this real estate advice!
HVAC costs $7000
All other appliances cost $3000
Total estimated repairs + appliances incl.HVAC= $15,000
Tagged with: Auction • Copper Plumbing • Crawl Space
Filed under: Renting & Real Estate
Like this post? Subscribe to my RSS feed and get loads more!
Well if the bank isn’t renting the property its going to get rid of it. Its a non-productive asset so it will go.
Ensure you have enough backup, comp property reports are a godsend as are photos of the missing piping, fixtures.
I tend to pad my repair numbers because you never know what you’ll find if you have to tear up the house. You’re already estimating $30k in repairs. Add more and still factor in your profit margin.
With the banks over flooded with houses in their portfolios they are eager to get rid of these properties.
What you do is figure out exactly what would be the after repair value of this home. You can do this by asking realtors or the listing agent to give you comparables of this market by giving you atleast the last three houses that sold in this area and the most recent houses for sale in this market.
After you have this information then you contact three contractors and tell them exactly what it is that this house needs repaired or replaced and to give you written estimates.
Then after you have this information make copies of everything including the comparable informetion and build a file of papers that you will give to the agent to give to the bank with your offer.
You will arrive at your offer by deducting all associated costs to make this house livable minus 20% extra for your profits if this will be an investment for you. If your buying for yourself and your family then it is up to you to deduct the extra 20% but I would offer this anyways to give you negotiating room.
For Example:
$230,000 After Repair Value
$ 25,000 Repair Costs
= $205,000 Minus Repairs
- 20% Profit/Negotiating Room
=$164,000 Your Offer
The reason you will give the agent all of this so he gives it to the bank is so the bank can justify selling you the house for this price and most times than not they will negotiate a good deal with you because having this house on their protfolio hurts their business leverage.
In other words to meny houses in their protfolio the Government will close the bank down by Federal Law.
And don’t let the agent tell you that the bank will not accept the offer and deter you from making a viable offer. By judiciary law he has to present your offer and if he refuses remind him of this, they don’t like it but it’s their job and liscense at stake.
I hope this helps you out.
Good Luck
Appliances are personal property and are not considered something required for the purchase of property. Where do you buy your appliances? I can go out today and buy W/D, fridge, stove and dishwasher for half of that. Any lender is going to scoff at your $10,000 appliance allowance and won’t approve your offer.
Despite the volumes of misinformation available, lenders are not accepting low ball offers to “clear the inventory” or liquidate assets. They pay brokers and appraisers to determine value, and are in a position to wait for someone to come at least close to their price.
You can expect the loss mitigation department to budge, but you are not asking for a budge here.
Make your offer, see what happens. Better to have tried and failed rather to have not written the offer at all.