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We are about to submit a bid on a property. The property failed to sell at auction, most likely because it was purchased in 2004 and is not worth anything near what it foreclosed at.
We inspected the place this morning. It is in a horrendous state of disrepair. Our agent said there is no value in the house itself, the value is in the land.
How common is it for the lender who now owns the property to accept an offer for the value of the land? They are aware of the condition of the place.
Dealing on bank-owned property (REO's) is just like dealing on any property. You negotiate the price the same way, i.e. offer, counteroffer 1, counteroffer 2, etc.
They may surprise you and accept your offer. However, the bank will want to get as close to recouping their money as possible. If there was a large amount owed on the property (as in 100% financing before the market dropped), they may counter with a sustantially higher number. On the other hand, they may just want to cut their losses and be rid of it.
Be aware, though, the whole REO process usually moves very, VERY, VERY slowly. There are so many entities involved it can take forever to get a signed, executable contract. One REO deal I was involved in (representing the buyer), we didn't have a fully executable contract until 1 week before closing. And they changed things on us!!! What a nightmare! We did get it closed but it was a nail-biting one to say the least.
You are soooo right about banks taking a long time. The last house we bought was an REO. It took 6 weeks to close a cash sale. Our offer was accepted in less than 60 minutes, so I was surprised at how long it took to close.
I know that the bank has already taken a bath on this property. I am hoping they want to cut their losses before it gets any worse.
We are also in escrow on an REO, and you're right it is EXTREMELY slow. Just getting the contracts that the seller drew up themselves, took 4 weeks to get them to sign them. Now, the appraisal came in $65,000 less than our bid . . . . so apparently that takes board meetings and many signatures to get a reduction in price. Sick of the whole process at this point.
shorts sale is way worse, timewise. 6 weeks is a long REO, and a very quick short sale.
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