How much to offer on Freddie Mac owned

riosambaJune 13, 2009

I'm a longtime GW member but an infrequent poster. My husband and I have found a house that we like very much but we are unsure how much to offer.

Freddie Mac owns the house and it has been on and off the market (mostly on) for about a year. It's located in a well established neighborhood in a Denver suburb with good schools. This suburb has had its share of foreclosures but is not a ghost town by any means. The asking price is $269,000. The house doesn't appear to need major work but has cosmetic issues (poorly done diy hardwoods, old carpet, popcorn ceilings, bad paint). It also has a large deck that needs refinishing. All of the appliances are gone except the dishwasher. The layout is odd but would work for us. It is not "turnkey" in the HGTV sense, but once appliances are in it would be livable.

The house has had 4 realtors.

Comps are a hard question because nothing has sold in the neighborhood since 2007. Our agent says this means the neighborhood is stable. DH feels that it means the market is dead!

There are four other homes on the market in the same neighborhood:

1. $288,900 This house has nearly identical finished square footage and has been completely updated (floor plan is not odd). Owned by a real person on a lot that it is 3000 sq ft larger (corner lot). Mountain views from the deck. On the market at this price for at least 6 months.

2. $289,000 This house is larger by 1000+ square feet (lot is also 1000 sq ft larger than "ours")and is beautiful but has significant structural issues. It's bank owned and they want a cash buyer. Price recently reduced about $30k.

3. $329,900 This house has nearly identical square footage (not an odd layout) and lot size, has been updated with granite/stainless & is in excellent condition. Price has been reduced from $343,000. It sold for $356,000 in 2007 and is owned by a real person.

4.$362,000 This house has nearly identical square footage/layout. It's very similar to the corner lot house. It's been totally redone w/ granite, stainless, etc, has a 50 year roof and some mountain views. It's owned by a real person who paid $329,000 for it in 2006.

We can offer a reasonably quick close and the only contingency will be inspection (so we can walk in case of major problems).

Any ideas on how low we can go? We do love the house and neighborhood, but we can buy in a nearby neighborhood of older ranches (same school district) that are only a little smaller for around $200,000 (and quite possibly less).

Thank you so much for reading this!

Thank you for reporting this comment. Undo
sheilajoyce_gw

It seems to me you ought to offer rather low. You will have expenes bringing it up to snuff. Also, the other houses may be listed at a close price, but they have not sold either. FMac may well own enough houses that they would love to sell at a bargain price. I have heard such discussions about bank owned foreclosed homes these days on the radio--work with the bank, start quite low, allow enough time to hammer out a deal. They would love to reduce inventory.

    Bookmark   June 13, 2009 at 5:53PM
Thank you for reporting this comment. Undo
sparksals

Personally, I'd be wondering why it's been on the market so long and gone through four realtors. I'm thinking maybe there have been offers and then the inspection found serious problems, hence not being sold in a desirable area.

    Bookmark   June 13, 2009 at 8:06PM
Thank you for reporting this comment. Undo
riosamba

Sheila, we keep hearing all of those stories as well, and hope this house will be a happy ending for us.

Sparksals, that may well be the case. DH and our agent have gone over it with a fine toothed comb and found nothing bad, but that doesn't mean there isn't something lurking! We will have a thorough inspection. The biggest problem out here is expansive soils, and we see no indication of any trouble with this house, so that is encouraging. No signs of water damage anywhere.

    Bookmark   June 13, 2009 at 9:47PM
Thank you for reporting this comment. Undo
jeff_90254

It sounds like you are a relatively unmotivated cash buyer; the perfect position in this market. I donÂt know what REOÂs are selling for in your area but I have a few comments:

1)All the financial institutions (including Freddie) will take a minimally contingent, all cash offer, with a quick close very seriously -- especially for a home thatÂs been on the market for a while. IÂd find an agent used to dealing with REOÂs (not short sales as many now try to specialize in). These will tend to be very aggressive and typically work with investors, which I know you are not. Have your agent call the previous agents to find out whatÂs going on with this house.
2)Forget about what any home sold for in 2006, 2007, or even 2008. If you already have an agent attempting to use these as comps, as nice as he or she is, the numbers are not useful -- as are current asking prices. Anything beyond say three to six months ago is completely irrelevant in todayÂs market so it sounds like you donÂt have much to go on. The good news is neither does Freddie, so you can call the shots. The only thing you can be certain of is that the maximum you know this house will not sell for is $269k. Do you know much work it needs to put it into tip-top shape?
3)Assuming it really is only cosmetic, an experienced ROE agent should be able to walk into the house and give you an excellent ballpark idea of the fix-up costs. Assume the furnace and a/c do not work since you will not be able to check them. Add maybe 25% to any estimate but use $15k or $20k minimum, and subtract from $269. This would be a full price offer if you really want to pay that much. I would offer much lower, but I donÂt know the house or how much you like it.

Good luck.

    Bookmark   June 13, 2009 at 10:59PM
Thank you for reporting this comment. Undo
marys1000

I was wondering about this...
"Have your agent call the previous agents to find out whatÂs going on with this house."

Are other agents allowed to 'tell' or are there legal issues with that?

And whats the more attractive part of a "cash offer with few contingencies"?
The cash part or the few contingencies?

    Bookmark   June 14, 2009 at 7:23AM
Thank you for reporting this comment. Undo
dreamgarden

"There are four other homes on the market in the same neighborhood:
1. $288,900 This house has nearly identical finished square footage and has been completely updated (floor plan is not odd). Owned by a real person on a lot that it is 3000 sq ft larger (corner lot). Mountain views from the deck. On the market at this price for at least 6 months."

Unless you mind living on a corner, I think this house sounds better. It is not a foreclosure, does not have an odd layout, is completely updated, is on a much larger lot and has nice views. That alone would make it worth the extra 19k to me.

Since this house has been on the market for 6 months and has plenty of competition, I'll bet that this owner might be willing to welcome a cash offer of the same price the other house is going for.

    Bookmark   June 14, 2009 at 9:01AM
Thank you for reporting this comment. Undo
riosamba

Jeff, I think you make a great point- the numbers really don't mean much at this point! Agent is not trying to use them to get us to make a big offer. He knows we want to do something low and is ok with that. I LOVE the suggestion to call the other agents. Allowed or not, I'll just bet that some gossip happens.

Mary, I think many sellers like offers with quick closings and few contingencies because it means the deal will be done soon and there aren't as many ways for it to go wrong.

Dreamgarden, I hear what you are saying. The other house is "nicer," no doubt about it, but we have already decided that if we can't make out like bandits on the odd one (which suits us and feels like home), we will buy in the ranch neighborhood. The houses in that neighborhood meet our needs; they're adequate. We love the neighborhood of the odd house and would be thrilled to move into it. However, given the state of the economy, looming college tuition, etc., we want to be very conservative in our spending right now.

Thank you so much for all of the thoughts, ideas, and information. They are really helping us clear our heads.

    Bookmark   June 14, 2009 at 9:38AM
Thank you for reporting this comment. Undo
brickeyee

Find out what the value of the note against the house was written for.

This will tell you how far in the hole Freddie may be.

    Bookmark   June 14, 2009 at 1:27PM
Thank you for reporting this comment. Undo
pamghatten

Are those 4 properties you noted, active listings? Now I read again, you state they are "on the market".

Those are not really comps ... they haven't sold. Ask your agent to find you recent comps that have just closed, that will give you a better idea of the actual market.

    Bookmark   June 15, 2009 at 4:16PM
Thank you for reporting this comment. Undo
riosamba

Brickeyee, the foreclosure amount was just over $278,000.

Pam, yes those are active listings. The last houses to sell in the neighborhood went for $275,000 & 296,000 in 2007. The $275k house was very similar to "ours" but without the cosmetic issues and a floorplan that is probably more appealing to a greater number of people. The $296k house was similar in size but has some extras (has wet bar, for example), more formal floor plan, and granite, etc. It was in very nice condition with some new mechanicals.

We are putting in our offer tomorrow. Agent is advising us not to go below $207,000. We may start a little lower.

    Bookmark   June 15, 2009 at 10:57PM
Thank you for reporting this comment. Undo
ncrealestateguy

IMO, they will sell for about $225000.
If it helps your case, send in those comps from 2007 at $275000, and let the Seller know that the market has come down X%, and also let them know of the real condition of the home. Remember, they have never seen the home in person.
Good Luck.

    Bookmark   June 16, 2009 at 7:46AM
Thank you for reporting this comment. Undo
brickeyee

"Brickeyee, the foreclosure amount was just over $278,000."

Note or note plus foreclosure costs?

Unless you have seen a copy of the recorded note do not rely on anything else.

    Bookmark   June 16, 2009 at 9:32AM
Thank you for reporting this comment. Undo
riosamba

Well, fiddle-dee-dee! After a year on the market somebody else beat us to the punch. The house went under contract a few hours before our offer was done. It will be interesting to see how much it sold for (I'll update when it is recorded). I don't think we are going to put in a backup bid, but if it should fall out of contract while we're still looking we may still offer.

Thank you for all your thoughts, ideas, and information.

    Bookmark   June 17, 2009 at 11:36AM
Thank you for reporting this comment. Undo
sweet_tea

I think you should offer on the $288k home and try to get it for $225k-$235k range.

I bet the owner/agent is thinking of lowering the price soon anyway if 6 months on market. If you don't get it for a good price,then move on to Plan B.

In the mean time, the other Freddy Mac home might fall out of contract. But you could very well get the $288k home for $225k-$235k. Especially if it is vacant or if the owner really wants to sell. They could very well be sitting on that home for another year+ and the prices could fall even lower if they don't sell to you, and if the owner is an agent, the owner knows this. Take advantage of the market and the fact that you are a cash buyer.

    Bookmark   June 18, 2009 at 11:03AM
Thank you for reporting this comment. Undo
riosamba

That is an interesting suggestion, Sweet Tea, I will have to discuss it with DH:)

    Bookmark   June 18, 2009 at 4:50PM
Sign Up to comment
More Discussions
New front door--ok to put lockbox on back door?
We have a new (quite expensive) front door and screen...
pinkpaula
How do you value a pole barn?
Does anyone have a good rule of thumb for appraising...
weedyacres
Pond Dye Dumped Into My Pond and Stream... Water Rights Question
I never posted once in seven years, and now I post...
ncrealestateguy
Move or not?
Went to an open house the other day. The house was...
zeitgast
Real Estate Agent Fees
My nephew is selling his condo, the agent that is selling...
enjoyingspring
Sponsored Products
Pebbles & Bamm-Bamm Limited-Edition Sericel Gold Framed Print
$79.99 | zulily
Bunny & Carrot Paper Towel Holder by Alessi
$66.00 | Lumens
Safavieh Indoor/Outdoor Area Rug: Safavieh Rugs Chatham Ivory/Black 5 ft. x 5
Home Depot
Furniture of America Russell Fabric Sofa - Gray - IDF-6607GY-SF
Hayneedle
Trudeau Medallion Rug 8' x 10' - LIGHT GREY
$1,829.00 | Horchow
Nourison Indoor/Outdoor Area Rug: Nourison Rugs Modesto Cobblestone Beige 7 ft.
Home Depot
Bruck | Ledra Chroma R II LED Glass Recessed Light
$281.25 | YLighting
Worlds Away - Molecule Iron Coffee Table In Gold Leaf - MOLECULE CFG60
Great Furniture Deal
People viewed this after searching for:
© 2015 Houzz Inc. Houzz® The new way to design your home™