Expert: Jessica Bryan - 7/5/2010

Question
My fiancé and I are looking to buy our first home and we have our eye on a home that is in pre-foreclosure.  It's the perfect location and we love everything about it.  We went to the court house and they told us the owners still owe $165,000.  The house is very damaged.  They left 2 dogs alone inside for about 2 months and just visited once a week to pour a big bag of food on the floor.  I'm sure all flooring will have to be removed as well as having to use a clean-up service and painting.  No one is in the house right now and they haven't been for months but they left couches and trash all throughout the home.  My question is what our next moves should be and from the information I've given about the damage, what amount do you think we should offer?  The court house gave us a lawyer's name and the name of the bank who will be getting the house.  We've been trying to get in touch with the lawyer for 2 weeks but there's been no luck.  There's no way anyone will get $165,000 for that home and we really, really want it.  We would appreciate any tips, steps, or information that you may be able to share!

Answer
Hello Brittney;
First, you need to know the actual value of the home if in good condition.  This is easy to determine by checking surrounding homes of equal size and similar amenities (when fixed up.)  Let's assume that the home is worth $200,000 (for purpose of discussion and illustration.#  The bank wants $165,000.  The cost to fix, repair, clean and upgrade is going to be, say $50,000.  If you were to pay the bank the full amount owed, by the time you spent the money to repair and clean up you would be over-paying for the home by $15,000!  Therefore, you need to offer at least $15,000 less for the home in this example.  So...evaluate your costs and subtract them from what you think that the home is worth.  That is the maximum you should offer the bank.

In any foreclosure, it takes lots of phone calls and diligence.  There is a ton of red tape so be patient and keep making phone calls.  Make a nuisance of yourself #in a nice way...always being polite but persistent.)  For example, calling the lawyer, ask for the name of his assistant and speak with him/her.  Always be pleasant but ask lots of questions and ask when you can expect to hear back from the assistant or the lawyer.  Then call back right away if they haven't gotten back to you.  Again, be pleasant.  Apologize for disturbing them again but continue to make you request.  I have actually found that sometimes by calling often, they just push you to the top of their call-back or to-do list to get rid of you!  It works like a charm.  I personally do lots of this with apologies for being such a pest and then keeping them on the phone as long as possible with lots of questions and chatter.  Then, calling back much sooner than arranged.  I can just see their eyes rolling when they hear my voice.  I can imagine them muttering about what a pest I am.  However, after just a few calls I seem to get the results I want.  Even in negotiations this works.  So if the bank doesn't want to drop their price, by asking who makes this decision and then calling that person and trying this tactic over and over with the same offer often works well.  Try it!

Best wishes to you.

Jessica Bryan