With the current state of the Real Estate market, a lot of people are looking for tips for buying foreclosures. And they’re right; this is a nice time to be looking at buying Real Estate, either for you own personal use or as an investment property. However, there are some things you need to keep in mind when negotiating to buy REO properties so we thought we would put together some tips for buying foreclosures for you. Click here if you are looking for the foreclosure listings.
Accept the condition of the house
First of all, you must always bear in mind when looking at foreclosures that the house may not have been lived in for quite a few months. If no one has been looking after the property, you might have a few surprises in store on that initial visit. Keep an open mind but know that you will have to deal with an exterminator to get rid of rodents or insects. You’ll want to have the plumbing checked if the utilities have been off for a while to make certain there were no frozen pipes that may have burst during the winter. And you will need to test the furnace, air conditioning, and water heater to make certain they’re in good operating order.
Know you are not the one interested in buying
You’re not the only buyer who’s interesting in buying foreclosures, and the bank might receive dozens of offers for the property you are interested in. Typically the lenders take all of the bids into consideration and sometimes they toss all but the two highest offers and then ask each of you to make a “Highest and Final” bid. Either way, with a little research you can make certain yours is the winning bid.
Inquire about the lender’s purchase price
Ask your Real Estate agent to find out the lender’s purchase price, or you can get this yourself from the tax rolls or a title company. Compare the original mortgage balance and the foreclosure sale price and somewhere in between is the amount the bank will accept. You also need to look at figures for comparable sales in the area over the last three months. The market value of the home and the asking price are two different things. You’ll know you can afford to raise your offer a little and still be paying less than the house is worth if the bank is asking a very low price as compared to the market value of similar homes in the area.
Get a pre-approval letter from your lender and the bank or lender who holds the mortgage. You’ll be able to use your lender when you close. However, banks don’t trust approval letters from other banks. So if you’ve got also gone the additional step and can provide a pre-approval letter from the bank who holds the mortgage, too, you will look that much better.
Know home inspectors
Get to know various home inspectors and let them know you are looking at purchasing a foreclosure property and ask them to be available. If someone else asks for 14 days to allow time for inspections and you ask for just five, then you may look good to that lender. One of the best tips for buying foreclosures is simply to remember that the bank wants out from under that property as fast as possible. The easier you make it for them to award you the property the easier it will be for you to move into that new home.