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Old 06-09-2010, 11:24 AM
 
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Is it better to leave some bargaining room in an offer for REO properties or give it your best shot up front?
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Old 06-09-2010, 11:28 AM
 
Location: Tempe, Arizona
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Depends on the situation. If you are likely to be in a multiple offer situation, you may want to give it your best shot up front.
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Old 06-09-2010, 11:47 AM
 
Location: Boise, ID
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In my area, REOs have been closing at an average of 99% of asking price, with multiple offers on almost all of them. If your area is similar, I would give it your best shot first. If it really is as high as you are willing to go, you can put a note in the contract that this is a "Highest and Best Offer".
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Old 06-09-2010, 11:49 AM
 
Location: NJ
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With a name like Trump I would think you should know the answer to this already.

But on a serious note, what the others have said. There is no way anyone can answer this question for you.
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Old 06-09-2010, 11:51 AM
 
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Quote:
Originally Posted by rjrcm View Post
Depends on the situation. If you are likely to be in a multiple offer situation, you may want to give it your best shot up front.
No offers yet on the property based on what I've been told by my agent. It has been listed for a little over a month.
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Old 06-09-2010, 12:14 PM
 
Location: Tempe, Arizona
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Quote:
Originally Posted by Trump View Post
No offers yet on the property based on what I've been told by my agent. It has been listed for a little over a month.
Then it may be overpriced. Likely bank will drop price soon if offers aren't coming in. Base your offer on what the comps indicate as market value.
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Old 06-09-2010, 12:15 PM
 
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Quote:
Originally Posted by Trump View Post
No offers yet on the property based on what I've been told by my agent. It has been listed for a little over a month.
No offer over a month? I wouldn't go full price no matter what the COMP says. Are people going to suddenly find it a fire sale? I doubt.
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Old 06-09-2010, 12:55 PM
 
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REOs are subject to the same laws of supply & demand as other properties (and all goods for that matter...).

If no one is willing to pay the price that is asked the price will eventually have to be reduced OR the seller will have to wait until such a time that demand increases and makes the current price attractive. In most parts of the country the former is still more likely than the latter.

OTOH even in tract developments there tends to be a range of properties that are more desirable due to features / site than others. If the property is "unique" in either a good or bad way that may very well explain the lack of offers. I have seen too many houses that are "not in keeping with the character of the area" that are either under-priced or overpriced and attract no offers. Who would really want to buy some old outdated house in an area of fancy expensive homes? Maybe a custom builder would take a risk on the site for a spec home in a healthy market, but now money for such efforts is still too tight and it easier to let the bank carry the property until such a time that demand improves. At the other end of the spectrum if the area is mostly run-of-the-mill homes and there is some "white elephant" that has marble columns and gold fixtures the lender is probably not eager to give it away. They know that eventually some one will fall in love with it and pay their price on the glitz factor...

The wild card in either case is not really knowing what the mind of the lender is -- or even if they are just so backlogged that no one really has set a real price for the property.

If you want to make any offer on any REO it is still a very mixed up barrel of fish!
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Old 06-09-2010, 01:13 PM
 
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Lots of interesting comments and plenty to think about. I think the property fits into the "unique" category as described by Chet and that may be why it was initially priced high. Comps put together by my agent suggest the same. I think another reason for the high initial asking price is the amount of money the bank has into the property. Can't blame them for trying to minimize their losses but I won't go any higher than what I think the property is worth. I've passed or been passed on a few REOs. One more won't make a difference.
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