BUYING FORECLOSURES - Tips in this Market

1. Be willing to drive various neighborhoods before involving a real estate agent

You will get the most benefit out of the relationship with your agent if you have already driven various communities and have pinpointed what neighborhood you desire to live or invest in.  In this market, there are thousands of foreclosures available (unfortunately for the previous owners) so one of the best ways to narrow your prospects and save your time is to determine first what neighborhood you desire to purchase in.

2. Know when not to low-ball your offer

If the property is already discounted 30 - 50% (or more) of the neighborhood’s value and there are multiple offers (be sure to ask your real estate agent to find out regarding this prior to submitting your offer), stay away from low-balling.  That is if you really want the foreclosure.  I have seen time and time again clients submit an offer lower than the asking price and lower than the price recommended by their agent (the person that is working for you and working to help you win the acceptance).  But because of other offers that are sometimes more than the list price (because that buyer recognizes the value of the home), the clients that submit extremely low offers end up frustrated and wasting a lot of gas because they never have an offer that is accepted.  In most markets, the foreclosure is already discounted for the neighborhood so it is important to be a shrewd buyer and make a competitive offer.

3.  Have proof of funds or a pre-qualification letter/commitment letter from a bank

Before submitting an offer for a foreclosure, it is critical in this day and age of bank troubles that you show the bank you are serious.  How can you show your seriousness?  By submitting with your offer a account statement showing your ability to pay (if you are a cash buyer) or by contacting a lender and having them submit a pre-qualification letter.  It is vital to not wait until you find the foreclosure property to get this documentation because time is of the essence.  For foreclosures that are good deals with great value, to prevent another buyer from “beating you to the punch” you should have all your documentation ready and in order.  So do this today if you have not but are looking for foreclosures to buy.

4. Be patient with the bank

After you have submitted your offer, be patient with the bank but try to get at least weekly feedback from your agent on the status of the offer.  Once the offer has been accepted, try to get feedback from your real estate agent at least twice a week to make sure things are still progressing on the bank owned property (REOs).  Remember, that you are not dealing with a sole seller or a builders that does only this - you are dealing with a bank that has numerous other responsibilities and must juggle this bank-owned property with other properties and tasks not even related to real estate.  Some foreclosures can take 3 - 9 months to close from the day it is found by a buyer - so be in it for the long haul.

Feel free to contact me with any further questions at ldavenport@remax.net or 404.444.5777.  Happy Foreclosure Finding!!