It seems that more and more people are getting excited about being on the winning end of the foreclosure crisis. Even though they are great deals customers sometimes are frustrated with the amount of red tape we have to go through and the fact that we have to do it the banks way. The game has changed in Real estate and navigating short sales and foreclosures requires a little study so I thought I would share a few foreclosure cliff notes with you.
- If the listing is relatively new to the market, it is very possible that the bank will not deviate much from its asking price. You will have greater negotiating power if you make offers on homes that have been on the market for longer than 30 days. Typically the bank will only go down slightly if it is new on the market. Another thing that I have noticed is that MOST banks are very aggressive in pricing their REO properties. On many occasions they end up selling for more than the asking price.
- Be prepared to pay all of your closing cost for most banks are moving away from paying typical seller closing cost for the buyer. Some fees such as transfer taxes, county and state fees, are borne by the buyer and not the bank. In addition banks will not usually pay for pest reports and home warranty plans as a typical seller. If you do want to ask for closing cost of any kind it would need to be a set amount and keep in mind that this may be just the term that keeps you from being the highest and best offer.
- Many times when you make your offer on a foreclosure the seller’s agent will come back to your agent and ask that all parties make their highest and best offer. This is a great time to listen to your agent’s advise on this matter. She will have great knowledge of what the property is worth and what others like it are selling for.
- Most times the negotiations are verbal and contracts are done by filling in blanks on an electronic system until an agreement has been decided between the parties. I have often described the contract that the buyer gives as a contract to enter into a contract. So as a buyer expect the bank to draw its own purchase contract or addendum to your standard purchase contract. The paper work is sometimes quite exhaustive but a small price to pay for a big discount.
- Foreclosures are AS IS contracts and any repairs are the responsibility of the buyer. The bank typically guarantees NOTHING. You will however in most cases be given an inspection period and if it is not a satisfactory one you may in most cases have an out of the contract and get your earnest money returned.
- The bank requires that you have either proof of funds or a pre-qualification letter from your bank to even put in your offer.
- Some banks even require you to be pre-qualified by their institution before submitting a contract. You may or may not use that bank for the final loan.
- If you cannot close by the predetermined closing date, the bank may charge you a penalty for each day you pass that date. It is important that you make sure all your finances are in order so that you do not end up paying an additional fee for your good deal.
Foreclosures really are a great way of getting a good deal but they are not the only way. The inventory is huge and the incentives to buy are astounding. I cannot remember a better time in history to be a buyer so rev up that computer and do some searching and call your favorite Realtor to join in your shopping adventure so you can hit the road and find that DEAL.