Market conditions are currently in favor of buyers, but that doesn’t mean buyers will find it easy to get their offers accepted. In fact, competition has become quite tough for buyers of bank-owned homes due to the fact that these foreclosed properties are priced low.
Multiple offerings are common, especially for prime repo homes. For this reason, you need to make sure your offer stands out from the rest. Consider the following tips.
1. Get the history of the property: This would help you determine what the purchase price was and compare it to the sale price. You can make an offer that is halfway between the foreclosure sales price and the balance of the mortgage. If the house has a low price, the bank will usually accept that offer.
2. Compare Market Values: Look up similar bank-owned homes that have sold in the last three months and find out how much the winning bid was. Typically, buyers make an offer based on the listing price and not the property’s current market value. You may also want to look at pending sales as well as active listings to get an idea of how much you should offer for the property.
3. Determine the number of buyers – You definitely want to find out the number of offers the seller has already received. If there aren’t any, you can offer less and the seller will most likely accept it. If there are multiple offers, you should step up your game by offering to pay cash. For those of you who will be getting financing, a pre-approved letter and a higher offer could do the trick.
4. Don’t ask the bank to pay for repairs: Most sellers won’t offer to pay for repairs or even inspection, so don’t waste time asking. Instead, you can bring up the subject after the home inspection report has been completed, problems have been identified, and the bank has accepted your offer. You will need to renegotiate these issues.
5. Request for a shorter inspection period: It is important that you present yourself as a serious buyer, so when it comes to the inspections, you can request that it be done in 10 days if the other interested buyers request 15 days.
6. Split Fees – Sellers will most likely pick your offer if you offer to take half of the escrow or transfer fees.
7. Appraisal Check – Your offer should also be in sync with the appraised value, which should be close to the asking price. Sometimes low valuations arise due to multiple offers, but the banks will be the ones to face such a situation.
By following these tips, you are in a much better position to own one of these bank-owned homes. Just be sure to set aside money for repairs, as these properties will require a lot of rehab after going through a lot in recent months. Review your finances one more time to make sure you can actually pay the bank foreclosure.