Lately our office has been inundated with calls from investors throughout the country looking to snap up foreclosure listings at bargain basement prices. It’s true, we do have some bargain prices, and foreclosures tend to be a good deal.
Most of these investors want to only talk to the “Listing Agent” because they believe they’ll get the inside track on these deals. There are some investor gurus out there selling tapes on how to buy these foreclosures, and as a foreclosure listing agent for many of the banks I can tell you that the advice given won’t help you much, so save your money on these tapes.
If you’re looking to purchase a bank foreclosure, here are a few tips:
- If the property is a bargain, offer full price or better. Most of the foreclosures sell at or above full price. From personal experience our listings do, so we decided to pull up the entire MLS sales for 2009. Of the 8,080 single family home sales, the average List Price/Sale Price Ration was 99.02%, and if you look at median prices it was actually 101.8%. So the stats do match what we’ve experienced.
- Be prepared to offer proof of funds with your cash offer, or a pre-approved letter from a major bank. Many of the banks require a pre-approval letter from the bank handling the foreclosure so they know they’re taking the property off the market for a good buyer.
- Place more money in escrow. Believe it or not, banks do look at how much you place in escrow with your offer.
- Make sure it is not contingent on the sale of another property. Banks are not taking contingent offers.
- Work with an agent familiar with the process. In most cases listing agents take the information from your offer and input key bits of data online. The bank never sees your offer on the paper it is written until they accept one of the offers. Do not make the listing agent hunt you down for crucial information. Most properties have multiple offers, and the listing agent will just move on to the next offer filled out completely and correctly.
- Use an experienced agent who knows how to properly write a contract. If anything does not make sense, the bank will reject that offer and go with another offer they have confidence in, even if it is lower in price.
- Asset managers get graded on how close the final offer is to list price, and if they make the scheduled closing time. Asset managers get very nervous with offers that aren’t written well, as that’s a key sign the selling agent is poorly trained or new. If the agent is inexperienced, the confidence level of that closing taking place on time, or at all is compromised.
- When a bargain comes on the market, don’t waste time. It may be too late by the time you find out about it, so be ready. If you know the market, and know what you’re looking for, be prepared to act. This is no time for “Buyers Remorse” as the market will spit you up and eat you alive.
- Do your homework. Do not buy at the courthouse steps unless you are an expert in inspecting and title. When buying from a bank, do your inspections, read the bank contract closely, and know the market ahead of time. You’ll have little time to act, so be prepared ahead of time.
These tips, along with professional advice from an agent experienced in buying foreclosed property will serve you well, and give you the best chance of getting that bargain you’ve dreamed of. Good luck, and happy house hunting.
Watch The Future of Real Estate Video Show as we explain this and more.