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Old 09-13-2011, 05:13 PM
 
6 posts, read 30,930 times
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I'm looking into buying a foreclosure condo, but I'm having trouble deciding on what to offer. It was listed 2 weeks ago as an REO at $73,000, but prior to that it was listed for several months as a pre-foreclosure for $59,000, so would the bank consider it a "new listing"? Three similar units in the same complex have sold in the past year for an average of $75,000, and there are two other units for sale currently at an average of $136,000 (the sellers are really dreaming there).

The property I'm interested in is structurally sound as far as I can tell without an inspection, but it needs some serious work, mostly cosmetic; new carpets, refrigerator, back door, paint, stuff like that. In other words, it's not completely falling apart, but it's a dump! Let's say it needs $20,000 worth of renovation; should I factor that in and offer, say, $53,000?

On the one hand, I could technically afford paying list price, since I REALLY like the place and location, and the other units are way overpriced. My options are very limited, and this place would be absolutely perfect after renovation. If it were in move-in condition, I would pay about $90,000 if I had to, so if I buy this one for 70 and put in 20 in renovations, it's basically the same thing, right?

On the other hand, I obviously want to pay as little as possible. My agent is thinking along the lines of $50,000. I agree that that would be a fair price, but life ain't fair! I'm concerned about going too low and letting this one slip away.

Anyway, I'm curious to hear some other opinions.

Thanks for reading.
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Old 09-13-2011, 08:43 PM
 
Location: Tempe, Arizona
4,511 posts, read 11,924,314 times
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Quote:
Originally Posted by raindog1976 View Post
...It was listed 2 weeks ago as an REO at $73,000, but prior to that it was listed for several months as a pre-foreclosure for $59,000, so would the bank consider it a "new listing"? Three similar units in the same complex have sold in the past year for an average of $75,000, and there are two other units for sale currently at an average of $136,000 (the sellers are really dreaming there). ...
The prior listing at $59K by the previous owner as a short sale is not relevant, it is a "new" listing as far as the bank and anyone else is concerned.

Were the similar units priced at $75K in a similar condition needing repair? If so, then it would appear the asking price may be reasonable, and trying to knock off another $20 may not be realistic. If the others were in better condition, then you should adjust the price for the difference in condition. You really should limit your sale comparisons to the past 3 months if possible.
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Old 09-13-2011, 10:04 PM
 
6 posts, read 30,930 times
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Quote:
Originally Posted by rjrcm View Post
The prior listing at $59K by the previous owner as a short sale is not relevant, it is a "new" listing as far as the bank and anyone else is concerned.

Were the similar units priced at $75K in a similar condition needing repair? If so, then it would appear the asking price may be reasonable, and trying to knock off another $20 may not be realistic. If the others were in better condition, then you should adjust the price for the difference in condition. You really should limit your sale comparisons to the past 3 months if possible.
Okay, so I'll consider it as a new listing.

In the past three months, two units sold in late June; one for $66 (a short sale) and one for $88. I don't know what condition they were in, but I'm assuming the one for $88 was in decent enought shape. So, from the bank's perspective, a price of $73 would seem pretty fair, already well below market value and price-adjusted for renovations needed? I agree that an offer of $53 would be unrealistic. If it were move-in ready, I think a price of $88 would be pretty fair. I'm having a contractor look at it tomorrow to see how much it will be for basic repairs and such. Argh!

Just because it's a foreclosure, doesn't mean I can expect to get it super-cheap, correct? Maybe I should stop looking at it as a "foreclosure" and just see it as a house I want.

Thanks a lot for your help!
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Old 09-14-2011, 08:13 AM
 
Location: Tempe, Arizona
4,511 posts, read 11,924,314 times
Reputation: 2193
Quote:
Originally Posted by raindog1976 View Post
...
Just because it's a foreclosure, doesn't mean I can expect to get it super-cheap, correct? Maybe I should stop looking at it as a "foreclosure" and just see it as a house I want. ...
Although perhaps not super-cheap, foreclosures are expected to sell at a discount to traditional sales. You really need to analyze your local market to determine how much of a premium traditional sales are getting over comparable foreclosures. If the other comparable sales are also foreclosures, then those are good benchmarks. Your agent, if you have one, should be able to help you with pricing.

Another consideration is potential competition for these units. If you don't expect to compete with other offers, you can be more aggressive on price and perhaps start off much lower then negotiate to an acceptable price.
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Old 09-16-2011, 05:52 AM
 
Location: Baltimore
1,759 posts, read 4,422,725 times
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Something to consider is if you're financing the condo or not. Depending on how many people are in arrears on their condo fees, FHA may not lend to that building. Something to ask the property manager about.
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Old 09-20-2011, 11:22 AM
 
Location: Barrington
45,892 posts, read 34,076,160 times
Reputation: 15339
Quote:
Originally Posted by raindog1976 View Post
Okay, so I'll consider it as a new listing.

In the past three months, two units sold in late June; one for $66 (a short sale) and one for $88. I don't know what condition they were in, but I'm assuming the one for $88 was in decent enought shape.
Why assume? Does your agent have first hand knowledge? Your agent has access to the MLS for closed sales. You agent has access to the agents involved in the other transactions.
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