Jerry, Real Estate Pro in 20020

buying a foreclosure property

Asked by Jerry, 20020 Mon Feb 1, 2010

I am working with an agent and I plan to make an offer on a foreclosure house very soon. I will be paying cash for it. I want to do a home inspection because the property is in bad shape and dilapidated. So I will request the home inspection contingency. What can I do on the purchase agreement (offer) contract or in general to increase my chances of the bank accepting my offer?

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Jerry,
I am sure your agent is aware of the ins and outs of what to do but here are a couple of suggestions.

They really like cash so just be sure to look at the comps and then price according to the condition of the home in camparision to the comps. Put you contingency for no more than 7 days, 5 would be even better.Tthe quicker you remove contingencies the better they like it. Put a quick close of escrow date. If they know it will be a done deal quickly, they are happier.

Good Luck
1 vote Thank Flag Link Mon Feb 1, 2010
Jerry,

You are right about the need for a thorough comprehensive inspection for the property. Ask your agent about the standard wording of your purchase agreement you will be using. Most will protect both the buyer and seller but be certain you understand these details before venturing into this.

Banks love cash offers....it removes the possible difficulties associated with arranging for funds that are quite common during these transactions. With this said, banks like "clean deals"....those with contingencies often find their way to the bottom of the pile when multiple offers are involved.

Your best approach is to keep your offer simple and minimize contingencies.

Remember:

Cash

minimize contingencies

make yours the best offer

Good luck,

The Eckler Team
1 vote Thank Flag Link Mon Feb 1, 2010
Haha Jerry!

I put confidence in agents because I am one! I know that there are a lot of agents who are in the wrong business, but if you already have an agent that you don't trust, you're probably getting into this property on the wrong foot.

Make sure you are seeking council from a quality agent who knows the ropes. Yeah guidelines are changing daily it seems, but that is the nature of buying a foreclosure. There is higher risk and the potential for better gain.

In a foreclosure in Idaho, the bank doesn't own the property, nor does any other law firm or third party....the defaulted homeowner does and until he doesn't, you're not allowed on the property, period.

To increase your chances of getting your offer accepted: Simple, offer more. The bank or 3rd party is interested in their cash net first and foremost. Things you might consider would be, higher earnest money, non-refundable earnest money, or something that shows you're not gonna flake out. In a foreclosure though, the purchase agreement is pretty basic...no real negotiating here.

My advice for you: Find an agent you completely trust, who knows the ropes!
1 vote Thank Flag Link Mon Feb 1, 2010
Aaron, you have way too much confidence in agents. Not all agents are familar with foreclosures and how these banks operate. I mean, the rules and guidelines for bank owned properties change all the time. Also, in a foreclosure, you are not always dealing with a bank, rather, you could be dealing with a brokerage or a law firm representing the banks. Also, this is a foreclosure purchase and not a short sale. I think there is a difference between the two.

thanks for your response.
0 votes Thank Flag Link Mon Feb 1, 2010
Jerry,

This is a great question to be asking your agent. Is there any reason that you've decided to ask here?

If you're making an offer on a Trustees Sale (foreclosure) the chances of doing anything on the property, inspection included, is going to be tough.

If you're making an offer on a Short-Sale, then yes, you just need to add an inspection contingency in your purchase and sale agreement. Your agent will know how to do this.

If you're making an offer on a Bank Owned home (REO), the yes, you just need to add an inspection contingency as well.

My advice, seek the consultation of the agent you are paying. They are front and center of your transaction, but if you don't feel you can trust their answer, then you need to find someone or something that will get you what you are paying for.

I know it's easy to ask questions online, but talking with your agent about your circumstances and questions is by far the best way to go!

Good Luck!!!
0 votes Thank Flag Link Mon Feb 1, 2010
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