Okay, l asked a similar question a few days ago, but now l have some more detail. This house is 962 sq.ft., lot is 7,500 sq.ft., 2 bed, 1 bath, great neighborhood. It is owned by a bank, due to foreclosure. Asking price was 57k. l went on Zillow, and their estimate for the house is value is 98k. Also, no other house on that street is worth less than 60k. Comparables are between 50k and 120k. We had put in an offer for the house for 40k cash. They came back within an hour with a counter-bid of 55k. We can not really spend more than 48k cash for this place, but l really do not wanna lose this dream home. Do any of you have any ideas of what price the bank will accept in this situation? We wanna be counter-bidding correctly, by starting with offering 43k, then making 48k our final offer. Do you think this is fair, and do you think the bank will ultimately accept that? Do not forget, this transaction would be done with cash. Please help with your opinions!
First of all, thank you all for your advice! Second, and most important- WE GOT THE HOUSE FOR 45K!!!!! For all those who believed it was possible, thank you extra much! And for those who had NO faith at all- well...........thanks anyways.

You can play games and still end up losing the house. Just go in with $48K being the best and final offer.

Odds r the bank is not going to budge.

Here is why, with the bailout in July, & the most recent bailout of the government buying into banks, the banks have NO incentive to sell these homes & get them off their books. NONE.

As long as the loan & house remain on the banks books, they r not showing the loss, so their stock stays higher & they do not have to tell their shareholders, including the government, about the loss.

In essence, many banks r finding that empty homes r worth more than the cash in hand.

They countered, u r always free to counter, there counter.

Keep in mind that even if they accept ur counter offer, u still need extra cash for closing costs. Water, taxes, insurance, fees, title, etc, etc, etc. Anywhere between 2-10% more than what u pay for the house.

Any chance u guys could get help through a bank or HUD/FHA to come up with a little more?

But do not count on ur zillows ''guestimate zillows says my home is worth $250k & we paid $179k for it without a furnace or kitchen cabinet doors FOUR years ago. We have dumped $20 grand into it & still could not sell it for what we paid for it, my guess is that we could not sell it for $130,000 right now.

Are there other people competing for this home? (Or is it likely that they are?)

If not, l would hold ur ground with the 40K. You're in a better position than the bank is here. They really want to get rid of the property & could just be playing a game trying to see if u will come up. Just keep countering 40K, & see if they give in. That will make it clear that you're not willing to budge & they should stop bothering trying to counter. Stick to ur guns, & pressure them to come down.

Edit: l meant to say here that if no one else is bidding on the house the worst that could happen is that u start the bidding process over with a higher bid. Of course, there'd still be a small chance that someone could come from out of no where & buy the house for the asking price.

In this market, l would not get too attached to the house. Remember there r thousands of foreclosures on the market to choose from.

The banks willingness to come down on the price really comes down to how much money they have invested in the home. If a previous owner owed the bank 53K before the bank took ownership, the bank wo not want to come down much more than that amount. You should be able to find out, from ur county auditor, when & what amount the last purchase price was, & estimate based on that how much was owed on the property when it went into foreclosure. Banks right now r typically prepared to take some level of a loss on a foreclosure.

Edit: However, if u really want to make sure u get the house, u could bid at or slightly above what u estimate to be the amount the bank was owed on the house.

Edit: l kind of disagree with the person below me about the agent thing. l find in buying foreclosures working with the seller is agent can be a good idea because they have extra incentive to sell u the house (double commission.) Because of that they might be willing to give u hints on what to bid & what the bank will accept. Of course, they r biased so take what they tell u with a grain of salt.

Even if u have ur ''own'' agent they r not neccessarily working in ur best interest. They r just after the commission, so it is in their interest that the house gets sold.. not that u get a good deal. If u already know exactly which house u want there is not really a value in having ur own agent, whose job it is to help u find the right house. You can do research yourself & ask the sellers agent to get u the comps. The seller is agent in most cases will go above & beyond to make sure u have what u need to buy the house.

Although l do agree that Zillow is basically useless.

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One more thing. after ur reading ur question again l realized l did not really answer it. Do l think the bank will ultimately accept ur 48K offer? Yes, probably, since it is only a few thousand off from what they want. That is if no one else has bid on it, & it is been sitting for awhile. If they really think this is their only chance to get it off their hands, then yes. Like l said, l would stick to the lowball amount & see if they come down at all. If they come down to 48K, then accept it. But u should not come up, because then they will keep coming back with things that r higher. You should scare them into thinking that u r really set on the 40K price. At least that is my take -- but l live in the midwest where houses r selling for $1 & banks r really super desperate to get rid of inventory.

Please, please, please tell me you’re not basing this data solely on Zillow!! That website is notoriously inaccurate!!

Here’s the deal: If a bank owns the home, they have it listed with an agent. That means u should have an agent of ur own so that u have real data, not the made up hokus pokus from Zillow. That way, when you’re submitting an offer, u can use the data ur agent provided (meaning real recent sales) to back-up ur offer price.

It may not work, but you’re cheating yourself by working without professional representation since the listing agent will collect all of the commission – including the portion that would have paid ur agent – if u elect to work alone.