Formula

[amvg22]

Is there a good formula to use when negotiating a price on an REO, or off the MLS?

Thanks

[Agent001]

I suggest using 80% of the asking price as your target purchase price. Keep in mind that the owning bank expect their people to negotiate. They want to see that an effort was made to get the best possible price, so expect to go back and forth a couple of times. Also, the asking prices on REOs are often already set at about 80% of thew surrounding market price to help ensure a quick sale (less than 90 days is preferred).

I'd start you bid at about 70% of the asking price. Negotiate back and forth. If you can end up between 805 to 85% of the asking price, you're doing good. Be sure to cross reference with the local non-REO market... your final price should be somewhere around 60% to 80% of that.

Is this making sense?

[Agent001]

Also, forgot to mention that what a bank will accept for a REO depends also on HOW you are buying it.

If you are paying cash and want to close in 10 days you'll be able to negotiate an much better price than if you're trying to use a FHA or VA loan and want to close in 60 days.

Of course, if you'r not the only bidder, all bets are off. This usually results in a brief bidding war and typically ends around or above the asking price.