Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I am a first time homebuyer and have found an Freddie Mac REO that I like and I am thinking about lowballing the hell out of it. It is an entry level condo. It is very overpriced IMHO...the comps come out at about the asking price but they are in MUCH better condition.
The kitchen in this property has been completely stripped out by the previous owner; no cabinets, no appliances, no sinks, no island, the only thing left is the dishwasher. The previous owner also rook the washer/dryer, left stains all over the walls and damaged the flooring.
The condo is not eligible for an FHA 203k loan because the building has more than four units. The condo is not eligible for a conventional loan or normal FHA because of the kitchen situation. The condo association does not allow renters at all so most investors aren't interested.
I have private financing through my employer that will pay for the repairs if I need them but it will take about 90 days to close because I have to get inspections and select contractor bids before I can close.. I am thinking about making an offer for about 40% of list since I think I have excellent bargaining power due to the limitations and problems of the property. Its pretty much my offer, a flipper, or some cash buyer showing up out the blue so I like my chances. My realtor disagrees and says that Freddie Mac won't look at an offer less than 95% of list so I am wasting my time, even if the property is over priced and has limited financing options. What do you all think? It is worth the effort?
In my area, REOs have been going for an average of 99% of list price. HOWEVER, because that is an average, that means that some could be substantially less if there are an equal number that get into a bidding war and go for more, which some do.
You probably want to have conversation with your agent though. Most good agents don't want to waste their time writing up 50 lowball offers for a client that they KNOW aren't going to get accepted. So while it is easy to say "it can't hurt to ask", it could hurt your relationship with your agent if you are not on the same page as to your goals.
I think you can safely go up to 15% less and still have a chance. If there are others available in better shape for this amount, seems the obvious choice to buy them.
If the unit doesn't sell the bank will lower the price in time. until it is sold. you might just let them sit on it a while as their decreases tend to be large.
REO is short for Real Estate Owned (by lender). Or it could be a classic truck, or a classic rock group!
Freddie Mac has guidelines for what it will accept under the asking price, and they are usually time on market driven with scheduled reductions. You may want to take a chance, if the unit has not been on the market for long and wait for reductions.
It is very overpriced IMHO...the comps come out at about the asking price but they are in MUCH better condition.
Unfortunately your HO does not mean much. It is the market that determines the value.
You need to do your homework on this one and come up with concrete costs for what it will take to bring this property back to comparable condition with other homes in the complex, then discount the property by that amount. That will produce a fair market value. You can then make your offer accordingly.
You need to do your homework on this one and come up with concrete costs for what it will take to bring this property back to comparable condition with other homes in the complex, then discount the property by that amount. That will produce a fair market value. You can then make your offer accordingly.
Not really.......Then you need to discount based on the fact that the house cannot be financed and cannot be leased which eliminates almost every possible buyer that exists. Most people who are buying entry level condos(if not in the center of Manhattan) probably cannot afford to pay cash up front for the purchase.
Not really.......Then you need to discount based on the fact that the house cannot be financed and cannot be leased which eliminates almost every possible buyer that exists. Most people who are buying entry level condos(if not in the center of Manhattan) probably cannot afford to pay cash up front for the purchase.
That's my line of reasoning as well. The condo market is quite slow in my area so I doubt that the flippers would really be interested. I am thinking FMV - Repairs - 35/40% for my trouble.
Quote:
Originally Posted by AONE
I think you can safely go up to 15% less and still have a chance. If there are others available in better shape for this amount, seems the obvious choice to buy them.
If the unit doesn't sell the bank will lower the price in time. until it is sold. you might just let them sit on it a while as their decreases tend to be large.
Im not in a hurry and I can wait them out but I think it would be Freddie's advantage to accept the inevitable sooner than later so they can save the HOA fees and taxes. I walked through it today and it is actually in worse shape than I thought. The bathrooms and deck need to be rehabbed as well. The previous owner was an artist and must have nailed her artwork to the walls because there are an absurd amount of nailholes that need to be filled in as well. My realtor is thinking about 25K in repair costs but I think that is low...i am thinking more like 40K.
The listing agent is incompetent as he did not mention any damage in the listing at all. I wonder if he just sent someone else in to take some photos and has never actually been in the property? His listing price seems to indicate this.
Quote:
Originally Posted by Norsky1
Do you really want to buy into a condo building that doesn't allow rentals? What if there is a life event and you have to move?
I am not from the area where I live, I have no family and I have a very stable job that is limited to this area. If something did happen and I lost my job I would still need a place to live in the area and if I get a good deal the mortgage would be less than rent.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
