- Home
- About
- FAQ
- Buying
Guide - Bookmark
Us - Contact
Make a list of your favorite properties. Check out the properties in person and don’t wait, timing is everything. Narrow down the results and get a showing with a realtor if there is one. If it is a new bank owned property and there is no Realtor yet then you may have to be satisfied to look through windows. If you think the home is a good value then check out at least 3 months comparables at zillow.com or trulia.com. Remember that property values are declining so keep that in mind when looking at comparables.
We suggest bankrate.com
Finding financing is critical to investing in foreclosure properties. Few sellers will consider you to be a serious buyer unless you have your finances in order. That means buyers need to be pre-qualified before engaging in discussions with a seller. Sellers want to make sure that a buyer is in strong financial position to purchase the property. So secure financing early. It is preferable to be pre-qualified by the bank that owns the property. Work with a lender who understands the foreclosure process, and can guide you through certain steps, such as ensuring that a property is FHA-compliant. Not all lenders finance foreclosure properties, so you may have to shop around for a lender who does. Obtaining financing not only gives you an estimate of what you can afford, it also enables you to move quickly once you locate a property that interests you.
If you're a first-time home buyer and you've never purchased a home, let alone a foreclosure property, it is beneficial to contact a local real estate agent who can guide you through the process of buying a foreclosure. If you work with an agent, make sure they know your priorities. Ask any potential agents if they have experience with foreclosures. Especially for first-time buyers, a good agent can be a comforting and a helpful resource.
Do not purchase a home on emotion! Only buy homes on price and value. We suggest an offer of at least 20% lower than the listing price. Offer less if the home has been bank owned for more than 100 days. Make your offer with a strong earnest money deposit of at least 5% with a 24 hour expiration date of your offer so the listing agent/bank does not shop your offer. Make an offer with a 10 day home inspection contingency. If problems are found during inspection re-negotiate.
Be prepared to move on to another home if your offer is rejected. If you have your pre-approval letter for financing the bank will know that you are serious. Usually a counter will occur unless there is activity on the property. Act fast if the counter is acceptable, if not move on to the next property. If the bank won't budge and you receive an offer rejection, wait another 30 days and then resubmit your original offer, with the original date crossed off and your new date inserted.
Expect the bank to draw its own purchase contract or addendum to your standard purchase contract. Read it thoroughly and ask a real estate lawyer or your agent for advice if you do not understand it. You can bet the bank's lawyer drew up that contract, and it's not in your favor. You will likely be asked to buy the home "as is." This is a drawback to buying foreclosures. As long as it is a relatively newer home and passes inspection you should be on your way to real estate riches!
