So, you’re interested in buying a bank-owned or REO (Real Estate Owned) property either to flip or to fix it up for yourself. Navigating the complicated world of real estate can feel daunting, especially when determining how much to offer on a bank-owned property.
Hubzu makes the process easier for you, newbie or veteran, by offering a marketplace for auctions and traditional sales as well as a marketing platform for lenders and financial institutions to sell the properties in their portfolios, including REO properties.
A Quick Refresh
When a home does not sell at its foreclosure auction, it becomes the bank’s property and the bank will attempt to sell it again. Every day a property is on the market, it is costing the bank money. Therefore, banks are often extremely motivated to sell these homes and in order to do so quickly, the homes could be listed for less than their market value. The bank could also choose to auction the home again on our online marketplace, selling the home faster and giving you the opportunity for a great deal.
Figuring out how much to offer on a bank-owned property listed on Hubzu will be similar to how you would do it if the home was listed on another site. Here are some things to keep in mind.
What’s Up Around The Neighborhood
When thinking about your offer, it’s best to begin by gaining an understanding of the real estate market in the surrounding area. Research how much move-in ready homes in the neighborhood are selling for. You can get a Comparative Market Analysis from your real estate agent, which could tell you the maximum amount you should pay for the property.
If you want to do this research yourself, go to various online listing sites to find homes that are similar to the house you want in number of bedrooms, square footage, amenities, etc. These comparable houses can give you an average cost per square foot, which you can apply to the bank-owned home to see what it is worth when it’s in good shape.
The listings you’ll find for bank-owned properties on Hubzu can also give you insight into how much a bank will accept for a home. Specifically, sometimes the seller can provide the amount the property sold for previously and when. This information can help you determine the previous mortgage amount which could lead you to a good offer for the home.
Get The Property’s History
Another piece of information that can help you when determining what to offer on a bank-owned property is the property history, like a title deed. Look for any loans that were taken out for the home and for the original mortgage balance. In addition, identify the foreclosure auction minimum price and, even, the current asking price. Somewhere in the middle of these numbers lies a good offer price, especially if the home is under priced by your market research.
Find Out How Many Offers Have Been Received
In general, if there are no offers on an REO home, offering a lower amount than the list price may result in an accepted offer. However, the more offers, the more you’ll most likely need to increase the offer amount.
On Hubzu, we’ll show you how many bids have been placed, how many bidders are competing for the home, each specific bid and whether or not the reserve has been met at that point in the auction. If there have been no bids at the time the auction ends, the home could be re-listed and the bank may decide to lower their reserve price in order to offload the property faster.
… And Days On The Market
While this doesn’t really apply to those bank-owned homes sold on Hubzu, another number that could affect your offer is how many days the place has been on the market. If the home has been for sale for 90+ days, you may be able to offer well below the asking price. You may get a counter offer and that is good data to have when re-thinking what you want to pay.
Inspections Are Worth Their Weight In Gold
Most bank-owned properties are sold as-is, which makes an inspection all the more important. If you know how much money you’ll need to put into the house and what you’d like to make in profit, then you’re closing in on how much to offer on a bank-owned property.
Figuring out how much to offer on a bank-owned property can involve a fair amount of research and teaching yourself a lot about this part of the industry. You’ll have to weigh that work against the benefits of getting a good deal on your next investment.