Texas Real Estate Commission Information About Brokerage Services                       Texas Real Estate Commission Consumer Protection Notice

Dallas homes for sale, Plano homes for sale, Frisco homes for sale, Prosper homes for sale, Allen homes for sale, McKinney homes for sale, Murphy homes for sale, Celina homes for sale, homes for sale


About Us Buyers Sellers Investors Commercial Relocation Contact Us Lenders Inspectors Titles
Builders Vendors PlaceHolder
Search Properties
Find Your Home's Value
Local Market Snapshots
Local Real Estate Trends
National Market News
Foreclosure vs. Short Sale
Dallas FW City Directories
Dallas FW School Ratings
Dallas FW City Tax Rates
Estimate Closing Cost
Mortgage Calculator
Mortgage Amortization
Green Tax Credit
Types of Loans
Relocation to Texas
Customers vs Clients
Repair Cost vs Value
Rent vs Buy Calculator
Your First Home?
My Blogs
Test Your R. E Knowledge
  Property Management
Open House Manager Tool

How Much Should I Offer for REO Properties?

Comparison between an REO and a Regular Property

Each foreclosure sale is different and requires a lot of details to be handled when buying a foreclosed (REO) property. Depending on many factors such as location, sub-division, local market, supply & demand, condition, time of the year, multi-offer vs. single offer, etc the suggested offer price varies greatly. Consult with your real estate agent regarding purchasing an REO or a foreclosed property.

There are many differences when purchasing an REO (foreclosed) property. Though, not all of them should negatively impact your decision, but you need to be informed and be aware of the differences. 

In order to come up with a reasonable suggested offer value for foreclosed properties we need to understand differences between an REO foreclosed property and non-foreclosed properties and put some values on those differences.

Due to the size, I have gathered and explained these differences in a separate article.

For more information and detail explanation of each difference please visit http://www.texasfivestarrealty.com/Foreclosure_Things_You_Should_Know.asp  or clink on the picture below.

 Differences between REO and Regular Sale

For those of you that would like to get an idea and interested in a “Rule of Thumb” formula, I have calculated the purchase price range as follow:


0.75 * ARV – RC =<     Purchase Price     =< 0.90 * ARV – 1.20 * RC

ARV    = After Repaired Value

RC       = Repair Cost

 For detail information, reasoning and Mathematics behind this formula, please visit my page at:


Example: There is an REO property listed for $170,000 for last 8 days in the MLS. After viewing and inspection you find out this house needs some minor plumbing’s, painting interior, and carpeting replacement throughout the house. Due to the natures of the repairs, they cannot be done all at the same time. It is estimated to take about 4 weeks and cost about $10,000 to bring the house in a move-in ready condition comparable to the similar house in the same neighborhood which was recently sold for $206,000.

As a “rule of thumb”, utilizing our formulas we will have the following range for offer:

After Repaired Value (ARV)                           = $206,000
Repair Cost  (RC)                                           = $010,000                 
Adjusted Repair Cost = 1.2 * $10,000            = $012,000


Maximum Offer = 0.90 * ARV -1.20 *RC = 0.90 * $206,000 - $12,000 = $173,400
Minimum Offer = 0.75 * ARV - RC = 0.75 * $206,000 - $10,000 = $144,500

$144,400 =< Suggested Offer Price =< $173,400

For more information on Foreclosure Process and purchasing foreclosed (REO) property, please visit http://www.TexasFiveStarRealty.com/Foreclosure_Process.asp

For a current list of foreclosed (REO) properties in North Texas, please visit http://www.TexasFiveStarRealty.com/List_of_Foreclosures.asp

 Contact us about your Real Estate Questions


Equal Housing Opportunity Commission Bahman Davani REALTOR

Bahman Davani, CM, RP
TAHS, eAgentC, and
CCIM Candidate

Texas Five Star Realty
Office: (214) 457-7055
Cell: (214) 457-7055

Plano, TX 75026-1665

Follow ME button from AddThis Share this page in Facebook 

My Blogs:
Subscribe to Bahman Davani Blogs RSS See Bahman Davani Blogs See Bahman Davani Blogs in ActiveRain See Bahman Davani Blogs in WordPress See Bahman Davani Blogs in Blog.com Texas-Five-Star-Realty-Manta-Badge See Bahman Davani Blogs in SlideShare See Bahman Davani Blogs in Zillow   See Bahman Davani Blogs in Klout See Bahman Davani Blogs in Plaxo follow me on Texas Five Star Realty LinkedIn See Bahman Davani Blogs in Blogger

My Real Estate Designations and Certifications:
Bahman Davani REALTOR Bahman Davani Commercial REALTOR Bahman Davani ABR Designation Bahman Davani GRI Designation Bahman Davani CDPE Designation Bahman Davani SFR Shortsale Forecolsure Resource Certification Bahman Davani TAHS Texas Affordable Housing Specialist Certification Bahman Davani Inbound Marketing Certification Bahman Davani Certified Manager from Institute Certified Professional Managers Bahman Davani eAgentC Internet Profficiency Certification Bahman Davani NMLS RMLO Residential Mortgage Loan Originator License Bahman Davani TRLP Texas Real Estate Leadership Program Graduation Send Texas Five Star Realty Text via email

. Copyright 2011-2024 Texas Five Star Realty Web Site Developed by We provide a fast and easy solution for your business. .