How much can you negotiate with the bank on a property that will be soon a foreclosure?

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I see many houses on-line where they ask you to make an offer before they get foreclosed on but their listing price is often higher than of the comarables...what is the deal? and if they actually get foreclosed on, how much can you negotiate with the bank, let's say on a house that is currently listed for 500k? From what I red online the bank will try to recoup the amount of the loans secured by that property, but usually those loans total more than the house is worth on today's market...I am trying to find out, if anybody knows, how much of a price reduction I could get buying an REO or a foreclosed property.

thank you!

How much can you negotiate with the bank on a property that will be soon a foreclosure?

There are several factors that go into what you should be willing to offer a bank and what they will be willing to accept but the truth is that you will NEVER know what their bottom number is.

Banks lend money on properties then resell the morgages to others and so make a profit on the gross amount of loans they create and sell. When a loan goes into foreclosure then the bank that wrote the note must repurchase that note from whoever they sold it to. Without getting too deep into the logistics of it; let's just say that the bank has to foreclose and if the house is not sold on a shortsale before auction date then the bank will go to the courthosue steps and bid the amount owed on the property. Most, if not all homes are bought by the bank because they are worth less then the amount owed on them. The house then goes into the Real Estate Owned department (REO) of the bank and is considered BAD DEBT. This means that the bank must hold additional funds in reserve to cover the rehab or resale cost of these properties. This means that the bank has to reduce the amount of funds that they have availible to loan out on new loans. The more property a bank holds the more they are willing to negiotiate to get these off their books and the more they will deal will lower offers on foreclosures and shortsales. The banks incentive for doing shortsales is the the property never gets titled back to the bank so it stays off their books or REO dept.

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How much can you negotiate with the bank on a property that will be soon a foreclosure?

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