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How much should I offer on a bank owned property?
Many people have contacted me about how bank owned (REO) properties are priced and how much they should offer for purchase.There are no hard and fast rules but here are some generalities.Is the price based on the amount owed at the time of foreclosure?Some supposed "gurus" have been claiming the banks base their list price and what offer they will accept on how much is owed. One "guru" had even researched (allegedly) over 200 transactions and came up with a number. He claimed 73% of the amount owed on the mortgage is what the bank would accept as an REO (bank owned property). Well, his results may have been accurate but the relationship between the amount owed and the eventual sale price was spurious. At that time, the market was about 25% below what the market was at the time these properties had sold. The same research done today on recent sales would reveal a much lower number.  You could probably find data that would reveal that the sale price was related to the tax assessor's value. Enough properties in your sample would come up with an AVERAGE. But, an average does not mean there is a relationship.Logically, this makes no ... more

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