Becoming a purchase nightmare!

[Julia Gunderson]

HELP! We have looked at this house for over three months and had contractors in it for repair estimates. Went on the market 11/14. Listed for 239k, tax appraisal is 402k. Keep in mind the house is gutted, down to stud and sub floors. 170k to bring the home to turnkey. We placed an offer with one of listing agents team members (first mistake I think)! We offered 190k, 30 day close, 5k em. They countered at 238k 11/17. Our agent said there "might" be another contract. I spoke to my husband and we called back and said "might" or "is" another contract. Our realator said there "will be" another contract today. With that said we told him to place another offer at 215k that day. By that evening he said they countered at 232k. I asked if the other contract was submitted that was going to be faded in and he said they hadn't received it yet! I waited till the following morning and we came back at 217k best and final. Also the other contract STILL had not came in. We are waiting now! What do you think will happen? I think our realtor lied for us to come up in price? HELP, new to this process!

[William Hochstedler]

$217K+$170K / $402K = 96% or less than 4% below assessed value.  Are your assessed values crazy low?  Is there an extra digit in your repair estimate?  According to your numbers I'd be offering less than $125K on this one.  Anyone can buy $400K properties for $387K all day long  Are you really considering an enormous rehab project on one of your first deals?

Assuming there's a typo in your post, a couple of things on buying bank properties:

First, make an offer based on your numbers and stick to them, do not raise your asking price based on counter offers.  This might work with a human seller who will think that you are willing to cooperate and find a mutually acceptable price, but banks do not care.  All they see is net to seller and are considering that based on myriad factors that are not necessarily connected to the property.

Second, other folks here may have different experiences, but I have never seen a protracted back and forth negotiation with a bank.  You offer, they accept or counter, you accept or walk.

The bank probably has a broker price opinion (BPO) on the property putting it in the mid-high $230's. They will stick to that number until the market has told them that that price is too high or until the REO file moves to another desk with different liquidation criteria.

I wouldn't get too caught up in this deal. As an investor dealing with REO's, you will always lose to someone willing to pay more (too much) than you for a property. I run my numbers and make the same offer (or less) every few months understanding that there are other buyers willing to pay more than me for these homes.

Also, for the next deal, find an agent with experience in the process to represent you.  It sounds like the listing office agent you engaged is a little green (or worse).

Wm