This question was recently posed by a potential buyer:

What is the discount percentage that banks usually find acceptable when purchasing bank-owned Spring Hill Real Estate?     

As much as we all wish there were some magic number/percentage that we could use, this is not the case when it comes to dealing with REO properties.  Ultimately, it comes down to two factors.

1.  How long has the home been on the market? If the home has only just come available on the market, the bank usually won’t be willing to negotiate much (if at all)  from the list price.  They haven’t had a chance to see if there are any other offers that might come in, and they know that they’ve already priced the home below market value - so it’s really not in their best interest to accept a lower offer before they’ve had any market exposure. Also - your “quick” offer lets the bank know that they might be better off waiting…after all, if you jumped on it right away, that may indicate that they’re too far below market value and if they wait 2 weeks, they’ll get multiple offers and ultimately sell for above the list price.  I’ve seen REO properties listed at $144,900 sell for $160,000 for this very reason. 

2.  Are there any offers currently on the table? If there is more than one offer on an REO property, the bank will usually issue a call for “Highest and Best”.  Sometimes this will be purely verbal, sometimes it will need to be in writing.  They call out to all the potential buyers and say “Just so you know, we’ve got multiple offers.  Give us your highest and best offer, and whichever offer will net us the most money is the one we’re going to work with”. At this point, you need to look at your numbers (hopefully you have already done your homework!) and determine whether the property works out financially for you at a higher purchase price or not.  If it does, you might want to consider upping your offer if you want the property.  If it doesn’t, then you should be prepared to stick to your guns with the understanding that you may not get the home…but then again, at that point the home’s too much money to be a good investment for you, so let the sucker (other buyer) overpay, right? RIGHT! 

Remember - you’re not looking for “the home” your looking for “the deal”.  If this one aint it, move on!  As dad always used to say “there are plenty of fish in the sea”… so keep that in mind and don’t get stuck on one property just because you put a couple of days worth of time into it! You’ll more than make it up when you hit “the deal”…trust me on this one…you do NOT want to overpay just because you got swept up in the moment (which is very easy to do!).Generally, if there are multiple offers or if a property is brand new to the market, you should plan on coming in close to or possibly even over the asking price.  Don’t let yourself get stuck on “X% below the list price”…it’s VALUE we’re looking for - REGARDLESS of the list price.  If it’s a good deal, BUY IT AND MAKE MONEY WITH IT!On the other hand - if the home has been on the market for a long time and sitting and sitting and sitting…lowball away!  Just last month I saw a home with 2600 SF Living area, 3 beds, 2 baths, 2 car garage on a golf course with formal living, dining, and family room (all with 18′ ceilings I might add) listed for $155,000.  It had been on the market for just over a year and had started out over $200,000…it sold for $110,000.  That’s a serious deal!  If you ever find a home in this situation - LOWBALL IT (but only if you don’t care about whether you get it or not…remember, the strongest negotiator is the one who can walk away from the table and feel good about it).Get a great Hernando County REALTOR on your side - preferably one who deals with foreclosure properties on a regular basis.  Have them run comps for you, teach you about the neighborhood, and about the process.  They will be your guide through the whole journey.  A good agent will not let you buy a house that’s not a good investment choice…they’ll look out for you and your best interest.  After all - if you make money on the first one, chances are good you’ll buy more (and be loyal to the agent who did such a great job for you to begin with).Best of luck, and if you have any questions, fill out our Question Form and we’ll get you an answer!Thanks,-JoshPlease Visit My Website for More Information About Spring Hill Real Estate!