Presuming no other reductions to the capital gain it could be $700,000 minus $125,000 equals $575,000 capital gain for which the tax could 20 to 23% or $115,000 to $132,250.You could save a ton of taxes and not have to do a 1031.

After working on other FM/HP deals, I'm finding that if you drop all contingencies (except title), they will take a reduction in price.

Update (although a little late as this closed back in June)Deal closed.The second buyer also failed to perform and I had to place this property back on market, drop the price 2 more times for a total price reduction of $40k.

In addition, we also distribute specialized MLS searches to keep investors abreast of all the new REO, short sale, expired, or price reductions on MLS listings.

Keep track of the price reductions in an area.

When buying at a foreclosure auction, I have several risks and most of them are controllable. I can figure out the ARV with some degree of accuracy, I can check for title, senior liens, etc.

The big worry for me is ...

But what could possibly come up to justify such a price reduction?

A 1% rise in interest rates is essentially a 10% reduction in purchasing power by the future homeowner.

Get an occasional good HUD deal with major price reductions if they have been on the market for over 30 days.

Ignore any request for a rent reduction for no backyard access during last summer.