How far below list can I offer on REO's?

[Marian Smith]

Last REO I purchased I offered, I think, 72k on an 89k listing with 90+ days on the market. My rational was something like 1) the listing agreement expired in a week or so, 2)original principal loaned was 76k in 2004 3) had been marked down one or twice and was due for a markdown soon so I might as well take the 8-10k markdown and then ask for more.

I represented myself but I am a new realtor (and I basically got my license because I couldn't find a realtor who would make a bid on a HUD for less than 5%.)

So.... REO World told the listing broker that they couln't go below 78k without "going to the bank management". Which they ended up doing.

Listing broker implied that the "thing to do" is to wait until a listing is reduced to within 10-12% of what I am willing to pay and then make an offer. But he was very nice and happy to unload the dog.

So it sounds like the asset managers have a certain window for which they are authorized to take less than list price. Either that or they always say they have to go to bank management like car salesmen do just to test your negotiating skills or resolve.

I have been looking at the MLS solds and I just don't see that many large gaps between list price and sold price.

I am under the impression that HUD home will go for 87% of list unless they have been sitting there for a couple of months because HUD would rather reduce the price and try to get more competition--so I guess for a HUD that has been on the extended list for 2 months you could offer list minus 10% or whatever the usual markdown is and then something above 87% of that number.

But what about the banks? Any magic numbers? Is BOA more desperate than Chase or viceversa? Also, my last offer was cash. What is that worth? And is a preapproved loan with Chase for say 75k accompanied with a copy of an untapped HELOC for 100k and a brokerage account statement with 100k in assets and an offer Not Contingent upon loan approval as good as a cash offer?