I am in a unique postion to pay cash on REO home...

[Bethany Hanna]

I am in the process of becoming a first time home seller, to then be shortly followed by being a first time home buyer. I am in the postion to pay cash (not cash because of bank approval, but cash as in $$) for a REO property. I have been looking at several properties in my area, but rather like one in particular. (I can just as easily become attached to any other property in my area, and there are so many to choose from) My main question is what window offer should I start off with?

After doing some research I know that there are at least 6 properties for sale within about 2 blocks of the property in question, most of which are also foreclosure/REO/Bank-Owned properties. I know that the property has been on the market for right around 60 days, and the asking price has already dropped about $25K in that time. The home is in significant disrepair, and will take quite a bit of work to get it up to code, ect. Not all basic appliances are in the home either, so I would need to make that additional investment. The home value is listed (tax assessed) at $312,000, but with all of the disrepair, I am guessing that was before so many other homes went into foreclosure around the property, etc. The house is approximately 3247sq ft on 1/3 acre lot.

I am interested in making a cash offer to the bank for this property to live in the property and fix it up as needed. My intention is to use the proceeds from the home I am selling (owned free and clear) to purchase this home, and want to know what the lowest bid I should make is? I know how high I am willing to go, but don't want to jump the gun and spend money that could be spent fixing the property to improve the other surrounding property values. By the time I can make this offer, the house (which I was told was already sold, but the financing fell through twice, and both times it was mentioned the prices of those offers was more than 1/2 off of the original listing price, which seemed like a ploy to me) the home will have been on the market for over 60 days without a doubt. Is there any advice as to how much I should offer to be able to get into this home? I have read some of the blog posts on this site, and think that the advice given is reasonably sound. I respect what any of you has to say on this matter. Please note that I fully intend to pay for this home cash in full upon the sale of the property, and not have to rely on a bank loan to get the funds to the selling bank.