Real Esate Blog

By looking at the search terms for people landing on my website, a number of them are looking for what price to offer on foreclosures/REO's. I will answer the best I can, but situations vary so widely, I cannot be precise. When I bid on foreclosed properties for my clients I investigate several factors to arrive at a suggested offer price.

1. First is to find out who currently owns the property. Is it the homeowner going into foreclosure, a lender who has foreclosed, or one of the goverment agencies, Freddie, Fannie, or HUD. All these current owners will necessitate a different offer price.

2. The second factor is to find out how long the home has been on the market, since the longer time on the market will mean a lower offer price unless the current price has been recently lowered.

3. Using tax records I can usually find out how much the bank/etc has invested in the home. This can help arrive at an offer price. 

4. Finding out the current condition of the property and the general appeal of the property will greatly affect the offer price. Obviously a home in need of many repairs or just plain "ugly" will mean a lower offer price.

5. Where the home is located is a huge factor in arriving at an offer price. Is the home in a sub with a large number of foreclosure? Or is it in an area with few foreclosures?

There is just no simple answer to an offer amount. It can vary from a 10% discount to 40-60% discount all depending on these and other factors. My advice is to get a "good" agent to assist you and you could be a winner!!

President Obama just signed the stimulus package and we can look at some of the provisions concerning homeowners.

1. It raises the first home buyer tax credit from $7500 to $8000 and removes the payback provision if you stay in the home for 3 years.

2. Reinstates the higher conforming loan limits that were temporary.

3. Provides funds for states to do foreclosure mitigation in hard hit areas.

4. Provides some rental assistance for families during this crisis.

5. Increases funding for rural housing development.

6. Exempts interest income from housing bonds from the AMT.

7. Provides grants for retrofit of energy efficiency upgrades to federally assisted housing. (Section 8)

8. Provides additional $200-300 billion for Fannie/Freddie to purchase mortgages and hold down interest rates on mortgages.

All of this coupled with the additional housing bill will help stabilize the housing market, good news indeed!