Real Estate and Home Mortgages - bidding process

hey, we found the house we want to buy, it is a bank owned home about 5 yrs old in west/mid michigan (pretty bad housing market) they have it priced at 140 k currently, when we viewed the home the papers there for it showed a price of 153k. we like the home but dont want a mortgage of over 123k and also want the seller to accept a "down payment assistant" / "ameridream" program that has the seller give up 3 percent to close, 3 percent to down payment and the lender we are with is offering up 1 percent. this takes approx 8k from seller at the price of 140k. is it "out of bounds" to offer a really low amt. in this case we are thinking of bidding 120k and at the same time asking for the down payment assistant program so we come to table with little to no down. any advice on the offer/counter offer process would be greatly appreciated.

Bid what ever you think it is worth. They can only say no or counter offer and they might say yes. They can't say anything if you don't offer.

If the bank owns it, they want to get rid of it, however, they are not going to give it away. My recommedation (which is probably worthless) would be to attempt to make the deal as clean as possible (don't ask for a lot and have some sort of financing arranged ahead of time). It would not hurt to talk to the appropriate people ahead of time. You are not dealing with a seller that will be insulted with a low ball offer, you are talking to a company (supposedly with no emotion) that wants to get out of the real estate business.

Another thought, since it is bank owned, you may want to work something out with them (assuming they do mortgages) to obtain a mortgage though them for the purpose of this home... it may save you a little in closing costs. Not sure how they will deal, but it never hurts to discuss options.

FWIW - the last bank owned property I purchased (I fix n flip) was listed at $185K. I offered $165 and they turned me down flat. I waited 30 days while the house sat on the market and offered $160K... and they snapped it up quickly. Banks don't want to own real estate - but will try initially to get a buck or two out of their property. I agree with the concept of making the deal as simple as possible..... trying to get a "ameridream" program work is typically done by raising the selling price enough to cover that buyer assistance for the seller - who in essence ends up giving nothing.... and the buyer ends up with a slightly pricier house but no down payment out of pocket. Ask your broker to find out (might as well use one - they cost you nothing and their fee is factored into the bank's pricing already) how much the bank has into the property - then offer 10% less than that to get the ball rolling.