If the property is already bank-owned, do you make an offer to the bank the same way you would with a seller? I heard that if a property is already bank-owned, you can make outrageous low-ball offers on the property and that some banks would accept next to nothing to unload a foreclosed home. Is there any truth to this? or should i make the offer i would if I were dealing with the original seller?
5 thoughts on “How do you make an offer on and buy a foreclosure property?”
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First, you need to find out which real estate agency/broker is handling the sale of the property. Banks don’t like to actively get involved in the sale. Find out how much they are asking and make an offer through the broker/agent. You can offer a lower amount but be prepared that there could be other potential buyers/investors who are in the running who might offer the exact amount that the bank wants or even a higher amount. In addition to that, bank owned properties require that your credit be sound and all your finances be in order to make the purchase. Banks don’t have time for delays while you search endlessly for financing. Have your pre-approval letter ready, your down payment, a clean credit history and lots of patience as the banks tend to operate on their own schedule and it can be a very slow process until the purchase is complete. You should also ask your real estate broker about acquiring a home as a "short sale." This is where the bank may sell the house to you if you offer the amount that is owed to them. Currently, the market is very bad and there are a lot of houses fitting this status. Research, research, research and you’ll benefit for doing so.
Edit: I also neglected to say that if you can make a cash offer, you will definitely be in a favorable position. As they say, "cash is king."
Go see the banker and see what properities are available. Tell him what your intentions are and see what he says…
You can put any offer in that you would like, but you have to remember that you are not the only person who is going to make an offer on the property. That doesn’t mean that you have to put in a full value offer, just submit an offer that you honestly think is fair; otherwise, you may be waisting your time.
Most banks are already selling their properties below market value. Which would be about 80% LTV. You have to see if the property needs some repairs and deduct the cost from the price. If the property was recently put on the market your chances of low balling them is slim. But, the number one thing you want to make sure you have is a pre approval from a repuable lender or a all cash offer to be considered.
Let me know if you need my assistance.
*sigh*
There is so much misinformation out in the public about short sales and foreclosures, this is the real deal.
Lenders obtain appraisals and broker price opinions about the real market value on their REOs. They aren’t accepting a small fraction on the dollar of RMV on a home. Lenders are in a position to sit on properties to obtain a good offer, and they do.
If a home is sold for drastically lower than other homes, it is because it is a distressed property – i.e. it is trashed.