How much below asking price on forclosed homes? (contingencies, foreclosed, agent)

[Desertrose34]

Okay so we are looking in Phelan,Ca. We live in Victorville already and hubbys work is here. So we are staying. We decided on Phelan because the school district is top notch and the crime rate is very low.

We have seen many affordable homes in our price range, of course we are trying to get the best value overall.

With the market the way it is, how much to ask below asking price? I know it depends on the area around and what comp homes have been selling for. I am wracking my brain trying to do all this and am on numerous websites, etc. And yes some of them are showing the last sold prices.

The agent will call us today and tell us for sure if we have the approval and for how much. The pre approval came in at $200,000, I would rather stick closer to $150,000, but if it is a truly exceptional house/property, maybe go as high as $175,000.

The homes out here have generally about 2 acres, but we are talking dirt roads, very rural living, which is fine for us. It is more expensive than victorville but the tradeoffs are less crime and better schools.

Victorville is a big city but they built 8,500 homes in the last 4 years and that place is crashing hard right now. San Bernardino county is paying up to 80% of peoples section 8. SO even now you could go buy a $200,000 home, pay $1,5000 a month and investors all around you are buying them up. Say they jack the rent up to $2,000 and rent it to section 8.

Then your neighbours are paying $400 a month! I am not saying all people on section 8 are bad.

Anyways. My question is this. My real estate agent is trying to tell us that she was just talking to her friend and that they are getting alot of investors calling up and other agencys are too and they are getting into bidding wars.

I could understand Orange County, San Diego, etc. But jeez, this is Phelan!

I think she is selling me a line of bull.

I don't see how this would help her. Yes I know she makes a commission off the sale, but if I chose a home that is $150,000 and buy it at asking price, or is I buy a home for $150,000 that had an asking price of $175,000 and we talked them down, etc. What difference would it make to her except for us, we got a better "deal".

How much do you generally have to put down on a "good faith offer"? How long is that money tied up?

[bentlebee]

Don't believe everything realtors are trying to sell you...if investors are putting up a bidding war, so be it and stay out or you over pay....it is a business deal (as many have find out now with their values going down hill), and leave emotion out. If you don't get the house, a nicer house might come your wayspecially with all the foreclosures that are still have to be posted on the MLS or advertised by the banks. In my area everyday there are new lis pendens added and as of today we have 19 either in foreclosure or already bankowned and not 1 is on the market for sale. At least 9 are bankowned and empty and not offered for sale.....19 out of 48 houses....not 1 because of a job lost...

You would be stupid to over pay. I get emails from realtors every single day. I looked at a bankowned home, a few months ago and the realtor was telling what a great deal it was...All I saw was a house that needed at least $ 25 K to get up to "normal" standards and way more to get the house with upgrades....with the $ 25 K added the price would be a "normal" price but than I bought one for the same price with many upgrades so it would cost way more to get it up to the same standard as the one I bought earlier that year....The realtor told me the house would be off the market fast since he had many offers coming in....well 5 month later and 3 times having lowered the listing price the bankowned is still not sold...If they take another $ 25 K off, I might consider it, but to deal with a lot of work while many construction companies are going broke and maybe left with half the work done....I'm not looking forward to deal with that. I understand and have had some work done recently at one of my homes and was very satisfied with it, but the construction comapny forclosed on their primary residence as well and I'm not sure if I want to deal with the stress of people not finishing work due to their own troubles...There are many homes on the market or will flood the market with less work to do....go with what you think is wise and don't let a realtor tell you that there will be a bidding war...say congratulation and call me if you won't have some one...wait the phone will ring!

[Bazzwell]

Sometimes there honestly are bidding wars and I'll speak solely on foreclosed real estate. We call them "highest and best offer" deals. It has nothing to do with us other than relaying the fact that more than one offer within acceptable range has been made and the lender will choose which to take. They may take the highest, they may take the lowest. Cash may win versus mortgage. Seller assist versus no seller assist. No contingencies or inspections versus....you get the idea. They may take none at all even after highest and best. There is no rhyme or reason with banks.

The last I saw was a property with a very good price. Two offers came in at asking price, one with cash, the other a mortgage. The lender turned down both and if that wasn't strange enough, lowered the price by $10k that same day. Then six offers came in at once.

Here's my hard and fast advice when such action starts. Unless you must have this house, don't bother getting into the game at all. Something else will come along. Lick your wounds and tuck the ego away and let's keep looking.

As far as offer price, banks usually won't consider an offer unless it falls within 10% to 15% of the current asking price. Doesn't matter how long the place has been sitting. The computer program leads the way and responds accordingly. You aren't really dealing with a human other than they're plugging the figures into the program and reading back what it says.

As far as money down when you make an offer, the agent will have to tell you that as each listing may have specific amounts. Low priced places might go with $500 down, usually a $1000. I've also seen some want up to 30% of the offer price down in cash. You present your deposit at offer time, perhaps your agent's firm holds it, maybe the listing agent's firm holds it. If your offer isn't accepted it comes back to you. The time frame should be explained to you by your agent.

Each listing has a different commission, some a percentage, some a flat fee, some come with a bonus. The real idea is that a solid agent should assist you in finding a house you like, that you want to live in. If you feel they aren't doing that then find another agent.

[Desertrose34]

You two have been very helpful and I appreciate your responses.