How Much of A Loss Will a Bank Take on an REO?

[Elizabeth Newcombe]

Hi,

I am feeling too lazy to research all the sales of auctioned REOs in my area to determine how much of a loss the banks are willing to take on these. I am wondering what my chances are of getting an auction property for $100k+ under the foreclosure amount. In your experience, how much below the foreclosure amount did you purchase a distressed REO for? The home in question has an ARV of $380k, and needs significant work to get it there, and the bid is at $240k, but the foreclosure amount is about $360k. Obviously they are not going to get $360k, which is what many lovely, move-in ready homes are going for in this area. (Attleboro) Just wondering what your experiences have been with regards to this? Thanks!

[Waylon Gates]

@Elizabeth Newcombe I just read through the posts again and I can't stress enough...  Just make offers and you will eventually get what you want.   If it is a property that there is no one else that might be trying to buy it than you can take the stance of trying to play the negotiation game and start really low and then go up a little and back and forth,  I have found that to be a waste of time for most of the deals.  You make money by doing volume, not by hitting it big on one deal.  Work your numbers on a property and then write a legitimate strong offer and you stand a much better chance.  I can't tell you how many times I have been the 2nd, 3rd, or 5th highest bid and end up with the property because I am serious buyer.  

As far as the agent that you use to represent you, I have found that any agent that is persistent can get your offer in front of the asset manager.  Trying to use the listing agent is a flawed approach.  Your better off to develop a strong relationship with 'your' agent and let them be your front man with all negotiations.  That way when you come back again later, or when there is another deal that comes up the other agents will know where to go to find you to offer you specific deals.  This is how I get off market deals all the time.  The active real estate agent community knows that my realtor represents 'that guy that will but a house like this and make an easy deal.'  That has made me more money than trying to second guess the bank.  

You have to also know that the auction price is set by a different group than the REO side generally. There are different concerns in the foreclosure than once the property is foreclosed and the bank actually owns it.

Here is the (not so) secret to getting deals.   Make Offers.   I truly can't make it any easier than that.

Best of luck to you in your investing!