Good luck with it buddy. If you don't get it at the price you want to pay, there will be another one come along.

Short sales are generally priced below market value. I don't think low-balling will get you anywhere. I could be wrong. But, I've bought about 7 houses in the last 3 to 4 years and made another go at probably 10 or 15 more. I'm a GC so I pick up foreclosures and short sales to flip and fix up for renting. It helps to keep guys busy between jobs, inclement weather, etc. It all depends on market and location. On thing to keep in mind, if the house needs work, especially a roof leak, the bank won't finance it. That's the case for the credit union I deal with. That could be why they haven't closed it. Bottom line is do the math. If it's a buy get it, but don't chase it. They'll be others right behind it. Also find out about right if redemptions and document all necessary spending if your under it. Although it shouldn't apply to short sale since it technically didn't foreclose. Just my two cents. I'm sure others will feel differently.

If you're having to ask how much to offer, you haven't done enough research.

-find comps for current
-average it out
-determine a precise amount for the renovations and repairs, not just a dart throw.
- stick 5% in for contingency.
-subtract this amount from the comp average.
-subtract 15-20% for the value of your time, profit, etc.

That's generally how I would go about it, if the comps show its worth $175k in good shape, and the repairs will cost $75k, there is no way I would get in for more than $70k. Even then, you have to hope like hell the market doesn't tank, and I'd be very scared of the real estate market right now.

Now If you are only interested in the home as a long term residence, that may change your numbers some.

^^^ smoke, I'd listen to the expert, and pick his brain some.

If it's a short sale, the bank has already established what they are willing to take. I would be shocked if you are able to get it for less than 115,000. I hate short sales, too much red tape and half the time they never work out for the buyer. Good luck, you are going to need it

So which is less of a pain, short sale or foreclosure?

I do a ton of bank owned properties as flips.

Im a licensed builder and build new homes, but we do a bunch of flips every year we buy from the bank.

Im also a licensed realtor and have done a little with short sales as well.

Short sales can be good, They are called a "Short sale" because they are selling for "LESS or SHORT" of what is owed.

In my experience you can get a good deal on it...but not as much as some REOs ( bank owned/foreclosed). The bank does NOT want to have to foreclose and may be motivated to take a good deal less though.

Now is a good time as the banks want to get rid of liabilities BEFORE the fiscal year end.

Another good thing about a short sale..is there is NO "right of redemption" like you get if you buy a foreclosure.

Foreclosures are good too. Ive done bank owned flips now for over 25 years...and have flipped everything to single family houses, multi family dwellings,,,even LARGE apt complexes.

Ive always been told how Banks wont move much..etc. WHATEVER. I don't care what folks say..Ive got banks down HUGE amounts.

As a matter of fact..Im closing on one Friday. Bank owned..was listed at $125,900. I am paying $95,000. $32,000 Below asking.
Most banks will make a deal..especially at the end of a year.

Id figure a hard number on the exact cost of repairs, do a comparative analysis and see what it should be worth fixed..based on the average SELLING price per sq ft on similar properties in the area.

Then figure how much I would be happy with for the acquisition price PLUS the repairs...still keeping it significantly lower then your Comps, so that when you do ever sell it you will be making money..not losing any.

Id start low...and if they say no..Id move up a little until I got it for a price I could live with.

If you CANT..then MOVE ON to a house that you can.

Short sales can be a pain as often they take longer to get everything worked out between the current owner, yourself and the bank.

Foreclosures are quicker..but they come with a 1 year Right of Redemption...where the person who lost it can come reclaim it if he gets the money to do so. Also, if you try to sell it before the Right of Redemption is over..you have to pay for a Redemption bond.

It doesn't sound like a good deal at $125k to me. I think there's easier ways to make a buck in the real estate investing world than what you're looking at doing. Lots of risk involved with a flip as well. I wouldn't get into it unless you have deep pockets. I see people all the time who have gotten in over their heads

Neighborhood? Prices holding well there? Other houses in neighborhood in good repair?

You might want to look into a 203(k) loan if the property is eligible for FHA financing again. It's an FHA insured loan where you can include cost of upgrades and repairs in your loan. You'll have to jump through some hoops. At closing the seller gets their money, realtors get paid, etc. Then as work progresses, draws are paid out from the construction portion of the loan. You can google search FHA 203(k) and see some info about how the program it works. You can check with FHA approved lenders in your area to see who does these loans.