Foreclosure/Power Of Sale Offer

[chrisstroesser]

Hello,

I am new to investing, but have purchased 2 income properties this year with a net monthly cash flow of about $1500. So far so good, but my question has to do with a power of sale.

I have the need to increase the size of my own living space, and have found a great house that needs work for my pricipal residence. I plan to rent my current residence. The property in question is listed for $298k and by my estimates due to the work needed would be worth that if it were 100%. I would like to get this property for about $250-260k and do some big reno to it and then should be able to get some good returns, but mainly want to live in it.

I don`t know what I can get from negotiating with a bank sale. I have heard that they will only go so low, and that I basically have to wait for the price to go down. I heard from my realtor that even the listing broker wanted to list it for $269, but the bank said no.

Someone else suggested getting my wife to start with a low ball offer(she has a different last name) and if the bank bites, then just add me on to the offer.

Any help with tips for negotiating with the bank on this would be helpful. Most of what you see on the net has to do with lists and finding foreclosures, which is not the help I need.

Thanks,

Chris Stroesser

 

[NikZad]

I'm a Realtor in Calgary and as of late have listed a couple foreclosure properties. You are correct in saying the bank will only go so low. One of my listings they acutualy asked me (via lawyer representitive) what price I would list the property for and what price it would SELL for. I thought this was a bit weird as i'm not physicic but essentially they were looking for a bottom line price and this is what the lawyer used when we recieved offers.



This is not the case for all banks, another foreclosure just wanted a fair current market price and considered the fact that it was sold "as is" when looking at offers.



The bank is willing to look at all reasonable offers but don't expect to get $50,000 off the price if all recent comparable are selling close to the banks asking. In most cases the bank is already taking a big loss on the property and need to try to limit the loss. The bank wants and will be looking for a CLEAN offer. Schedule "A" is a must and the property is sold as is so make sure you do your home work and get the place inspected. An offer with a quick possession and only a home inspection condition would be ideal.



If you can really prove that the place is only worth $260.000 when looking at comparables then send this info in with the offer explaining. Many banks get Realtors to compete for listings and the mistake of taking the highest market analysis is made.....show the bank the property was listed to high. Of course you can also gauge motivation by Days On Market, if the property was listed a week ago you can forget a low offer being accepted.




QUOTE (chrisstroesser @ Aug 4 2009, 08:59 PM)
Hello,



I am new to investing, but have purchased 2 income properties this year with a net monthly cash flow of about $1500. So far so good, but my question has to do with a power of sale.



I have the need to increase the size of my own living space, and have found a great house that needs work for my pricipal residence. I plan to rent my current residence. The property in question is listed for $298k and by my estimates due to the work needed would be worth that if it were 100%. I would like to get this property for about $250-260k and do some big reno to it and then should be able to get some good returns, but mainly want to live in it.



I don't know what I can get from negotiating with a bank sale. I have heard that they will only go so low, and that I basically have to wait for the price to go down. I heard from my realtor that even the listing broker wanted to list it for $269, but the bank said no.



Someone else suggested getting my wife to start with a low ball offer(she has a different last name) and if the bank bites, then just add me on to the offer.



Any help with tips for negotiating with the bank on this would be helpful. Most of what you see on the net has to do with lists and finding foreclosures, which is not the help I need.



Thanks,



Chris Stroesser

 

[PeterKinchMortgageTeam]

QUOTE (chrisstroesser @ Aug 4 2009, 07:59 PM)
Hello,



I am new to investing, but have purchased 2 income properties this year with a net monthly cash flow of about $1500. So far so good, but my question has to do with a power of sale.



I have the need to increase the size of my own living space, and have found a great house that needs work for my pricipal residence. I plan to rent my current residence. The property in question is listed for $298k and by my estimates due to the work needed would be worth that if it were 100%. I would like to get this property for about $250-260k and do some big reno to it and then should be able to get some good returns, but mainly want to live in it.



I don't know what I can get from negotiating with a bank sale. I have heard that they will only go so low, and that I basically have to wait for the price to go down. I heard from my realtor that even the listing broker wanted to list it for $269, but the bank said no.



Someone else suggested getting my wife to start with a low ball offer(she has a different last name) and if the bank bites, then just add me on to the offer.



Any help with tips for negotiating with the bank on this would be helpful. Most of what you see on the net has to do with lists and finding foreclosures, which is not the help I need.



Thanks,



Chris Stroesser




Like any other property - foreclosures should be listed and sold for fair market value which is typically determined via an appraisal or from a realtor, based on what similar comparable properties have recently sold for. One of the biggest differences is that the bank just wants to get rid of it - so you'd likely never see a foreclosure listed high.

 

[chrisstroesser]

QUOTE (CanadianMortgageTeam @ Aug 5 2009, 11:44 AM) Like any other property - foreclosures should be listed and sold for fair market value which is typically determined via an appraisal or from a realtor, based on what similar comparable properties have recently sold for. One of the biggest differences is that the bank just wants to get rid of it - so you`d likely never see a foreclosure listed high.


Yeah, well this is definitely overpriced for the work it needs. I have done my research on comparables and know this area quite well. Even the listing broker thought it should be priced at $269,900

 

[Sarnia]

QUOTE (CanadianMortgageTeam @ Aug 5 2009, 09:44 AM) Like any other property - foreclosures should be listed and sold for fair market value which is typically determined via an appraisal or from a realtor, based on what similar comparable properties have recently sold for. One of the biggest differences is that the bank just wants to get rid of it - so you`d likely never see a foreclosure listed high.

Peter on a foreclosure that we looked at - it needed a lot of work - the interior had been damaged, how does one qualify for a new mortgage on the property? Are the new owner required to put down a larger downpayment, we are a little interested but not sure of the financing aspect, your feedback would be appreciated

 

[markl]

Hi Chris dealt with the same issue a couple of years ago. My realtor went in did a song and dance showed comps and everything. To no avail. So I sat back and waited and the property ended up selling 60 days after my offer it sold for more than I was willing to pay.

My suggestion is you make your offer for what you think is a fair price. If they do not agree with you what has it cost you? If you have time on your side wait make an offer again in 30 days or 60 days. If it is truly over priced it will sit there.

The hard part in dealing with the bank is the fact that they are libel and face law suits if they do not get fair market value for the property. So if you can help them determine FMV then you stand a chance.

Good Luck