Need guidance on determining an offer price

[max]

I live in Southern California. I cannot afford any houses on the market and now I want to try properties in pre-foreclosure.

I have signed up for Realtytrac and need guidance on determining an offer price. Should I use the loan amount owed to the bank or the market value to decide my offer price? For example, a property I saw had estimated market value of $800K and the owner still owes the bank $405K. Should I approach the owner with....say $440K (10% above loan amount) or $720 (10% below market value) ?

I am new to dealing with pre-foreclosure. Any advise is very much appreciated. Thanks!

max

[paravico]

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[Alpharetta]

Do you know how the estimated market value was determined?

[Codythebest]

In pre-foreclosure, I suggest you put yourself in the owner's shoes and go below his minimum to end to the minimum.
Let's say the owner paid $500K with 20% down and a note of $400K.
I'll offer $475K and no more than $525K or up to 70% of FMV

[Agent 007]

Why would this owner be in pre-foreclosure if they have almost $400K in equity sitting in their home? Why wouldn't the owner just sell it outright for a little less than fair market value in order to make money and get out from under it? This just doesn't make sense to me. How do you know what the fair market value is anyway? Are you a Realtor or are you one of those people using Zillow to get home values?

These are all important questions. Can you elaborate a bit? Thanks.

[Ten Lakes Realty]

I live in Southern California. I cannot afford any houses on the market and now I want to try properties in pre-foreclosure.

I have signed up for Realtytrac and need guidance on determining an offer price. Should I use the loan amount owed to the bank or the market value to decide my offer price? For example, a property I saw had estimated market value of $800K and the owner still owes the bank $405K. Should I approach the owner with....say $440K (10% above loan amount) or $720 (10% below market value) ?

I am new to dealing with pre-foreclosure. Any advise is very much appreciated. Thanks!

max

What ever you can do to help the person getting forclosed on and still win, its sound like a good deal. I would do as you suggest and if the seller is hostile than offer the bank a quick close to get them out. If you can't close quick and get it off of their work load they may choose to list the property with a real estate agent to get a higher ROI. Good luck Max.

[Ten Lakes Realty]

Why would this owner be in pre-foreclosure if they have almost $400K in equity sitting in their home? Why wouldn't the owner just sell it outright for a little less than fair market value in order to make money and get out from under it? This just doesn't make sense to me. How do you know what the fair market value is anyway? Are you a Realtor or are you one of those people using Zillow to get home values?

These are all important questions. Can you elaborate a bit? Thanks.

great Comment. I agree, Zillow does not have real home values. Of course in our last month's realtor magazine was an article on appraisals being "opinion and not fact" Scary but True.. And your right, unless someone passed away, why in the world would they leave almost 1/2 a million dollars on the table. keep Those intelligent Comments coming.

[sellinggalveston]

Many owners dont know their options and therefore lose the house before they can fix the problem. If they lost a job and now have bad credit how can they cash out? Also if the market is slow a underpriced house can sit for months...

[Ten Lakes Realty]

Many owners dont know their options and therefore lose the house before they can fix the problem. If they lost a job and now have bad credit how can they cash out? Also if the market is slow a underpriced house can sit for months...

If a Seller is about to lose their home there should be enough time to attempt to sell the home, say they just lost their job and are living hand to mouth ( which is highly unlikely if you have $400,000 in equity) but it could happen, so you lose your job and immediatley put your home on the market or find a way out. anyone with any kind of brain at all would research the mortgage and foreclosure laws of their state and figure out how much time they have an plan an exit strategy. now I agree that in the $100,000 to $300,000 range people may not know their rights or care to.. But when your into a home over $400,000 and don't figure it out ~ you deserve to lose your equity.

(However if you watch Deal or No Deal, you see Greed loses EVERY SINGLE TIME.)

Some Folks don't know there options, true some do not.
I have had people that list their home for say $300,000 when fair market value is $200,000 and they only have 6 months until foreclosure while into the property $100,000. This is pure greed and they will not lower their price and lose everything including their credit, when they could have sold for the $200,000 and doubled their money. So, some do know their options but greed is a factor.

Some Folks just stage a foreclosure situation and change title to a non-profit for tax evasion - I have seen that disgraceful behavior. therefore if you chase these to "buy a good deal" you lose - they pull it out at the last minute anyway...

If you own an $800,000 house and do not "know your options" than it is imperative to learn them, they could go online, they could read, they could ask anyone. It is ridiculous to just be able to say, " hey man, I just didn't know".

also SellingGalveston asks "If they lost a job and now have bad credit how can they cash out?" Lets see, they could list the home with a Realtor and sell it, or sell it as a For Sale By Owner. Sounds like this guy is saying that if I have lost my job, have no savings, and am going to lose my house ~ I should just run screaming and crying into the night. " I didn't know...". Is SellingGalveston saying that if I lose my job I lose my Credit ? No I don't, if I lose my job and I own an $800,000 dollar house, I find a new job, scrape and crawl and do what ever it takes to breath life into the house until I can sell it. I don't get the booze bottles out, let all my bills fall into a pile at the door and whine "poor me" until the foreclosure police come banging on the door. If Galveston has folks who don't know their rights, lose their job and their credit in one shot, and have no clue how to cash out of their house than that's the town I should be investing in. Sounds like Sellers have NO Options and the Realtors there do not know how to educate them because at SellingGalveston.com they ask "If they lost a job and now have bad credit how can they cash out?" You cash out by knowing your rights, do not be greedy, be honest, take care of the property and work with the bank involved, face your situation with honor, and set out to get out from under the property with honor ~ credit intact and dignity. Find an invester, take a class, learn online FIND A WAY... Be Proactive People ~ find better solutions.. Its your life - Choose IT.

[sellinggalveston]

Why would this owner be in pre-foreclosure if they have almost $400K in equity sitting in their home? Why wouldn't the owner just sell it outright for a little less than fair market value in order to make money and get out from under it? This just doesn't make sense to me. How do you know what the fair market value is anyway? Are you a Realtor or are you one of those people using Zillow to get home values?

These are all important questions. Can you elaborate a bit? Thanks.

Hey ten lakes... All I was saying was in response to this post about how could they leave that much equity... In no way was it a "what to do in that situation" response. But of course everyone reading this board will understand that... please correct your post where it says not to use my firm in this situation. thank you.

[Thesa]

Ten Lakes - what is your beef here? Seems like you are picking more scabs than providing value to the forum - why are you so angry? We are all on the same side here.

[sellinggalveston]

thanks thesa... good point. We are all on the same side, fighting the same wars everyday... slow title cos, bad lenders, tough FSBOS, rough inspections, market swings, and much more... this forum is a place to post thoughts... not bash.