Does the bank really want to sell that house?Posted by Brett Tousley on Tuesday, March 22nd, 2011 at 12:49pm.
If you are in the market for a new home, most likely you've run into a foreclosed home lately. Foreclosures and short sales make up a significant portion of our current inventory on the market. As a home buyer, you need to be prepared for the realities of buying a foreclosed home.
Here's a few tips that will help you through the process of buying a foreclosed home.
1. Get yourself pre approved
Banks will not even consider your offer without a pre approval letter attached. In fact, many banks/asset managers will require you to speak with their lender of choice as well to verify your financing before accepting your offer.
2. Know your financing options
Some types of financing are better suited to buying a foreclosed home than others. You need to have a good working knowledge of the condition requirements your bank will place on the home. Most foreclosed homes will have some deferred maintenance that must be addressed before someone will lend you money to buy it. There are ways to work around these issues but you need to have your research in place before you fall in love with a home that may not qualify for your financing.
3. Understand the game
Buying a foreclosure can be quite a different experience than a traditional home sale. For starters, many of the homes may have offers on them well before they show up on the mls as Pending. The cause of this delay is the banks method of negotiating. It's not uncommon for a home to have a verbally accepted offer show up on the mls for another 10 days as Active.
4. Be realistic
If you are an average home buyer using average financing, you need to be realistic in your expectations of what a "good deal" is. Banks price their homes to move quickly, they don't always hit the mark, but it's pretty common to have competition from other buyers. It's a tried and true selling strategy, price low to attract multiple offers and then counter them all. Many times bank owned homes will actually sell for more than the list price. If you are working with a buyer broker that represents only you in the transaction, they can give you some guidance on writing a winning offer.
5. Hire your own real estate broker
Before you consider buying a foreclosed home, secure a good experienced real estate broker to help you through the process. A good real estate broker will have experience working with many different banks and their representatives. Don't be afraid to ask how many buyers they've helped recently buy a foreclosed home.
A good real estate broker can help you target the right types of homes for your particular financing and avoid wasting considerable time on homes that won't finance. An experienced real estate broker working for you will increase your odds of successfully cashing in on this market significantly.
There's a lot more to cover, but I'm off to buy a new video camera and preview some foreclosed homes for a client! It's a jeans and boots type of day:)
Brett Tousley is the designated broker and owner of NW Home Brokers. He can be reached at 253-820-2745 or email@example.com