Tips in Buying Foreclosure and REO Properties

  1. Do your homework. Know the market values, history of the property, and comparable properties in the neighborhood that are for sale and have recently sold. If your mind is set on a substantially discounted property, you may want to consider distressed properties that compete with the short sales. Working with a Seller in a standard purchase versus the Bank can save a lot of frustration as you will be answered in a timely manner, and there will be guarantee’s, disclosures, repairs often made, and you can usually count on a Closing.
  2. Have a thorough inspection done by a qualified Home Inspector. Include an Inspection contingency period in your offer. Ask if there are any past inspection reports. Although the Bank does not do repairs, it does not hurt to ask. Many auctions allow a small window to inspect the property.
  3. Foreclosures and short sales are best pursued by Cash Buyers. The time constraints and uncertainty are not viable components for Buyers that are financing. If purchasing with financing, a Pre-Qualification letter will be required with your offer. Consult with a mortgage broker or lender before you begin your search as financing is an obstacle in itself and can be difficult to obtain, especially with foreclosures and short sales.
  4. Work with Professionals. If you are considering Buying or Selling a Short Sale, Foreclosure, or REO property, for your protection obtain legal advice from a competent Real Estate attorney, call your accountant for tax ramifications, and work with a Real Estate agent that is knowledgeable and experienced with Short Sale, REO properties and the foreclosure process.
  5. Keep in mind throughout the process that the Bank is not a “Typical Seller”. Purchasing a property through foreclosure takes patience and commitment beyond a standard property purchase. Not all Banks correspond in a timely fashion, so as a Buyer and Seller in a Short Sale, patience is of the essence.

Can you negotiate the price of a bank owned home?

Everything in real estate is negotiable. However, banks are more sophisticated about pricing than they were years ago. The "great deal on a foreclosure!" days aren't what they used to be. Lowball offers generally don't always go very far. The few that do are usually a result of determined negotiation and a willingness to walk away.

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