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What Percentage Will Banks Discount Foreclosed Homes?


Q: What Percentage Will Banks Discount Foreclosed Homes? Jim, Alpharetta, Georgia

A: When banks sell foreclosed homes, they are normally trying to minimize their losses by trying to get the highest price they can.  Overtime, however, banks have no choice but to reduce the price of foreclosed property that has not yet sold, so the most patient real estate investors will earn the steepest discounts.

In general, it’s wrong to think of target pricing for foreclosed property in terms of a % discount for several reasons including the fact that the bank’s estimated property value of a foreclosed property may be inaccurate.  Banks have lots of foreclosed property that they have to dispose of, and banks are typically playing with their shareholder’s money anyway, so getting it right doesn’t matter as much to them as it should for you as an independent real estate investor using your own money or borrowed money!

The key is to do your own homework and make sure your property valuation numbers are accurate.  Always base your purchase offers on your own independent, verified valuations, not on what you speculate the bank is willing to accept.

Thanks for your question, Jim–good luck.

For more real estate tips and information, visit my blog at geraldlucas.com.

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