An update: according to the listing agent, there are multiple offers. Since this is foreclosure priced quite reasonably for the area the home is located, my agent is suggesting that we either go on go above the listing price or make a cash offer for a little less than the listing price. Obviously I do not have that kind of cash, so I will need to get a mortgage to finance the purchase, but at the same time by making a cash offer I will have no mortgage contingency clause in the offer. Given the current credit market situation, would you recommend such approach?

I got pre-approved for the amount I want to borrow in advance, so I kind of lean towards making the cash offer. In a hypothetical situation, what would happen if I submit with cash offer and then be unable to get financing? Is there anything else I need to consider when making a cash offer based on the assumption that I still need to get a mortgage?

Another approach I've been thinking about is increasing the down payment. When comparing the offers, do banks that own foreclosed proparties actually look at the amount of down payment (5% in one offer vs 30% in another one)? Another words, is there any difference from bank standpoint between 2 offers for the same amount that only vary in amount of down payment and thus amout of mortgage? Or is it more like a binary option, meaning you either do cash offer or cash + financing, no matter how much you're planning on putting down?

Thanks,
mike_fl

Mike,

Our recommendation is to explore all options and do as much research on local real estate as possible. Additionally, your position would be greatly improved with the support of an experienced real estate professional.

Consider attending open houses to both gather information on area homes and meet possible RE agents to support your efforts.

Best wishes,
The EcklerTeam

Mike,
I purchased 2 foreclosures last year (March and December) and I offered 23% and 28% below asking price respectively and closed. Although I ended up waiting 3 months on the forst one and 6 months on the second one it was worth the wait.

The only thing that you need to ask yourself is, is this property worth more to someone else? If so then maybe that 600k is a good price if everything else around is still selling for 800k and higher.

You don't have anything to lose but time, since banks take forever to answer bids on foreclosures.

Good luck