Low Balling a Bank Owned home?

Question

I found a house i love that has been on the market for about 65 days. There was an offer but it fell thru due to financing. The bank refused to give the guy more time and put it back on the market, indicating they want to get rid of it. I am a first time home buyer that can wait if I need to but dont want to move in a January Winter in Michigan. The Bank is asking 74,900 for it. There is termite damage. 1k estimate for repair. and possible septic issues. Which I am willing to deal with for the right price. My agent also told me that prices in the neighborhood are down a lot from what they were 2 years ago. I want to offer 61,500. Does this sound like a good basis to start negotiations. I am prepared to walk away and have done so twice already with other home. And I will not pay asking price.

Also when I right up the offer I am not asking for any assistance with repairs just 3% toward closing cost. And willing to close in 30 days. No inspections expect the ones the lender requires.

Answer 1

The true termite cant live in the north as it dies in winter. 'As is' offers require you to have a private source of money because the banks want homeowner insurance. I would go with your estimate and see if your mortgage people will use an 'as is' offer. Winter in Michigan can cost a lot for heat even low heat in an empty house.

Answer 2

Worst case, they say no.  I always do other things to entice them.  For example, put up a little more earnest money then normal, don't put in a financing contingency, etc.  Like in Idaho, you can back out close to the end of the deal with an inspection clause.  So I take out all the contingencies, then if I change my mind or can't raise the cash, I use an excuse in the inspection and back out.  

Answer 3

Banks do crazy things, once an offer falls through it is not uncommon to see a price reduction to boost more interest and generate an offer. Figure out the worst case on repairs and take that off the price. Your real estate agent should be able to help you. Banks expect low offers especially if repairs are needed. However, I do recommend that you have your own inspector check out the property. It is worth the $200 or so to make sure there aren't any bigger problems that you are unaware of. This don't mean that they will fix the problems but at least you will be more educated in what you are buying. Once you go to sale the property is yours. I would never let any of my customers buy without an inspection.  

Answer 4

Your agent needs to provide you with written evidence supporting the value of this particular piece of property, and not just 'what the neighborhood has been selling for".  If the bank is at proper market value for this property, including the possible repairs, they're not going to come down to YOUR offering price.

You need to understand that, in order to get proper deals from lenders, you must show them that their asking price is out of line with market values.

Answer 5

You sure your don't want inspections?  Is 1K enough with termite damage?

Answer 6

Typically, bank owned properties are as is and the price is what it is, maybe more in a bidding type situation.  You can submit your offer and as long as you are prepared to walk away if they do not accept your offer, it's all good.