Despite tightened lending standards and credit challenges beingÂ faced by many consumers in today'sÂ struggling housing market,Â distressed sales are still predominant in many neighborhoods. Â With the number of bank owned REO properties on the market, many buyers and investors are finding themselves in bidding wars or losing out on heavily discounted properties to higher, cashÂ bidders.
The key to successfully bidding on bank owned properties or securing a foreclosed home may lie within several factors.Â
Essentially, if you want to getÂ in the game, you'd better get your game face on!
Here are 7 tips from RealtyTracÂ that can help you buy REO-Foreclosed properties in any market.
- Hire an REO/Foreclosure expert. When looking for an agent, find one that is well-versed, highly skilled and knowledgeable in the art ofÂ dealing with bank owned properties. REOs are very different from traditional or conventional real estate, so make sure your agent is extremely familiar with the process. They should have reputableÂ negotiating and closing track records, and specificÂ distressed certification, educationÂ or training is a plus.Â
- Avoid lowball offers. Many REO properties are selling above list price so lowball offers are bad strategies. Bank owned properties are already aggressively priced so don't try to lowball the seller or your offer may beÂ flat out rejected if it even gets reviewed.Â
- Determine the value of the property, notÂ the previous mortgageÂ or theÂ sheriff'sÂ sales price, these have nothing to do with current market price or bank listing price.Â It is also advantageous to understand andÂ calculate any repair/rehab costs as well as operating expenses associated withÂ an investment propertyÂ in orderÂ to assessÂ short term and long term investment strategies.Â
- Submit a complete offer packet, with proof of funds or pre-approval recently dated.Â Be sure to follow the specific bank guidelines since each lender or seller has their own set of instructions.
- Prepare forÂ multiple offers. Don't rely on your first offer, many properties have multiple competingÂ offers.
- Prepare for counteroffers and be ready to negotiate. Unless your initial offer is at or above list price, many banks will automatically send a counter offer to begin negotiations.Â
- Be prepared to walk away if you decide not to raise your offer or present highest and best during multiple offer situations.
Theses tipsÂ should helpÂ you get started with the foreclosureÂ offer process.Â Be sure to find a good agent that will represent your interest throughout the transaction.Â Â Don't try to negotiate directly with the bank.Â Banks use listing brokers to represent them and typically will not communicate or negotiate directly withÂ buyers or consider any offersÂ before the property is listed.
Good luck with your offer and many happy closings!Â Â
For complete article, click here