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I saw a foreclosure condo which seems upgraded by the bank. I really liked the place, but the price can be cheaper.

Can we negotiate with the bank on such foreclosure houses? What are some strategies to get the best deal? Any tips, tricks, or expectations would be helpful. I'm a first-time buyer.

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Ask any buyer if he/she would like the price to be cheaper and they'll say yes.

It's not really a negotiation. The bank sets a price and you can put in a higher or a lower bid. Some set a base price and will not deviate from that.

I don't know if this will be helpful but my first home was a cannibalized repossession that was foreclosed by an out of state bank. It was going to be a sweat equity project if I got it. AFAIC, being out of state was an advantage to me since they had no local agent. I believe that I had two edges.

The first was that I was able to correctly identify what needed repair and how much it would cost and that allowed me to determine fair value and then I low bid.

The second was just good luck. I chatted up the out of state agent and when they had some difficulty getting the key to a few prospective buyers and since I rented nearby, I offered to be the local drop off for the key. When it got down to the wire, the agent let me know that I was 2nd lowest bid by $1k and I raised it a bit more. The previous high bid did not raise and I got the house at a great price and it was below the bank's initial ask. I assume that the price tip off might have been due to helping the agent out because of the other foreclosures I have purchased, no one ever divulged anything other than "You're not high bidder."

  • So its basically an auction and we have to send an offer/bid. Right? Eventually they just consider the highest bids. Now the tip is how to know the other bids! – Tina J Jan 28 at 4:20
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    @TinaJ The biggest tip of this answer is to work out an idea of “fair value” before putting in a bid. – Lawrence Jan 28 at 8:02
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    Piggy backing off of Lawrence's answer, this development had 346 homes with 5 models. I went to every same model For Sale home as the foreclosed model that I was looking to buy. Taking into account home improvements, appliance age, roof, AC, etc. gave me a base price range. Based on my determination of potential repair costs, I then determined fair value of the foreclosure. While my determination turned out to be accurate and because I'm not in the business, I got a friend who is a contractor to assess the damage as well. Once you know your numbers, everything else is out of your control. – Bob Baerker Jan 28 at 13:41
  • @Lawrence Yeah, I asked my agent to put in an offer (20K less). So they eventually sell it to the best bid they receive?! Won't they say its too low. We just wait for the right bid?! – Tina J Jan 28 at 17:13
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With a foreclosure or with a short-sale, the bank is just taking offers and probably looking for offers above the listed price.

A real-estate short-sale situation is interesting as the owner just wants to sell the property for less than the pay-off. But the bank would have to agree to the sale so that the property sells without any lien on it.

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    Consider putting in a lower bid. – S Spring Jan 28 at 5:49
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    "the owner just wants to sell the property for less than the pay-off" care to elaborate on this? – JoeTaxpayer Jan 28 at 9:50
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    In a real-estate short-sell the owner of the property is trying to make a deal with the bank that avoids a foreclosure. The owner wants the bank to take some amount of loss on the property sale and break the owner even. – S Spring Jan 28 at 11:08
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    Here is a link to a real-estate short-sale investopedia.com/terms/r/real-estate-short-sale.asp . – S Spring Jan 28 at 11:18
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    The real estate agent said to go with 5K less but real estate agents just use broad rule-of-thumbs. Figure out the situation for yourself and make your offer. – S Spring Jan 28 at 17:31

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