I follow many different periodicals, blogs and forums..both in print and on line..related to the topic of foreclosure. There is some really bad advise out there for people as to how easy it is to buy foreclosed properties. Today I am going to focus on a few simple facts that likely go against what many of these self-proclaimed knowledgeable people state.
You Should Make Your Offer At 50-60% Under List Price
Only if you wish to waste every body’s time. Most foreclosures are priced today where they receive multiple offers. The list price is where the discount to market exists. Sometimes the bank gets it right, sometimes they need to move the property. Just know that our average sale to list price ratio on bank owned homes over the last 12 months stood at 98% That is for almost 600 properties in four different markets! HINT: There are properties for sale, often by third party servicers or investors, where they do not seem to want to accept the market realities and over-price. These properties will be on the market for 90 or more days. Sometimes a more aggressive offer might fly.
Use A Superstar Agent Who Leads The Market In Their Sales Production
What..because everybody will cow-tow to their super stardom? This one cracks me up. It is a myth put forward by the large franchise real estate players in support of their top producers who are not funding as much overhead in today’s markets. Actually what you want is to find an agent who will follow the bank’s very specific instructions for how to submit an offer! If they are the superstar agent, then fine. In my experience, they often are not. For some reason, after years of foreclosures being a major part of the market, there still seem to be agents who think the banks will do business THEIR way and act like they can control the seller. If you choose one of these agents because of the confidence they seem to exude, you will likely not end up with an accepted offer. Buying bank owned foreclosures is a rather black and white program. Your agent needs to be somebody who excels at following instructions and details step by step. Find out how many bank owned homes they have sold or if you insist on using your cousin, make them share every shred of paper that comes to ensure that things are being done correctly.
The Process Drags Out So Don’t Expect Things To Happen Fast
Again, quite the opposite is true. Be Available! Whether by electronic communication, in person, or proxy, now is NOT the time to take that international vacation. Nobody from the listing agent to the bank really cares if the proposed buyer has to leave the country and will not be available to review the bank addendum contract until next Tuesday when it is due on Monday. Your accepted offer will be cancelled. Remember black and white.
The Bank Will Accommodate The Buyer’s Need For Repairs Discovered After A Inspection
Negotiation for repairs kills more accepted deals than anything else. Yes, I will admit the banks seem to have more tolerance for making a home habitable for owner occupant purchasers than ever before. Start with considering the type of buyer you are when you feel it necessary to request that the leaking kitchen plumbing be repaired. If you are investor, please refer back to some of my as-is means as-is posts. If you are going to live in the property, this request is a wild card. I do not know how the bank will respond. The first question I often am asked is “could the buyer have seen this need for repair on their own prior to making the offer?” If the answer is yes, chances are not good that the bank will front the repair. TIP-If you really want the property, do not haggle with the bank’s response. They usually make one response and if you do not accept it they cancel the deal.
A commonly heard order from Asset Managers is “BOM”. Back On The Market. Nobody is ever happy when this happens. Avoid these pitfalls in order to improve your chance for success in your foreclosure purchase.
