How To Buy A Foreclosed Home

For those with cash in hand or adequate credit to obtain a mortgage the time is right to buy a foreclosed home. While the foreclosure process seems complex, buying a foreclosed home can be pared down easy steps. The hardest part is in actually edging out competing buyers by offering to buy at a price and on terms that are attractive to the bank.

1. Determine what property you want to buy

You can easily find foreclosed properties that are up for sale from listing agents. The problem is, which one do you want to buy? Different foreclosed homes come in different features and conditions. It is important for you to know which one you would be comfortable buying.

2. Ask for the number of offers

If there are no offers for the home, you can offer a price less than the asking price. If there are over two offers, you might want to offer something higher than the asking price. If you are competing against 20 other offers, you will definitely need to increase your buying price in order to be considered. Some of the 20 offers might be cash offers, if you are using financing, you have to offer higher than the cash offers. Remember, banks love cash offers.

3. Submit your lender’s preapproval letter with your bidding price

In choosing a lender to finance your purchase, it is always better to choose the same lender who owns the property. In general, banks do not trust preapproval letters from other banks.

4. Don’t ask for repairs and/or inspections at offer

Banks typically do not agree to do any repairs during the offer stage. If you find a problem at the property during inspection, negotiate for the bank to repair the property AFTER your offer has been accepted.

5. Shorten your inspection period

Find out how many days other buyers are asking as inspection period. If you find that they are asking for a two-week inspection period, ask for ten days. That way, the bank will see you as a serious buyer.

6. Offer to Split Fees

The bank will definitely find your offer more enticing if you offer to split fees with them, like the title insurance. Banks typically negotiate for discounts on the title insurance. Let the bank know that you are willing to share in the cost transferring property.