Negotiating offer price on a previous Foreclosure on the market

[Derrick R.]

My realtor brought me a property that was previously an REO property but was passed from the bank owner to an heir. The property is now listed for sale on the MLS. The ARV comps for $170k and the house is listed for right under $150k and my realtor tells me that the owner is very motivated to sell. The house has been sitting on the market for over 6 months.

A quick analysis lands me at my max offer price of $80,000...that is if i want to make 15% on the ARV. Quite a bit less than list price! My max offer could probably come up some depending on actual estimated rehab costs that i would get from my GC.

So, my question is what should I initially offer. My thought was to offer $55k cash along with paying closing costs. This is to see if the owner is actually motivated and counters with a reasonable offer, upon which I will investigate the rehab numbers closer and proceed with my counteroffer. Thoughts?