A bank-owned property might not be a great bargain.
You must do your homework before making an offer. Make sure the price you pay is comparable to other homes in the neighborhood. Consider the costs of renovations, including time to complete them. Don’t get caught up in a bidding war and pay over market value. It’s an old myth that foreclosures are a bargain.
Each bank or lender works a little differently, but they all have similar goals. They want to get the best price possible and have no interest in “dumping” real estate cheaply. Generally, banks have an entire department set up to manage their real estate owned (REO) inventory.
• Once you make an offer to purchase, banks generally present a counter offer. It may be at a higher price than you expect, but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest possible price. You should always plan on countering the counter offer.
• Banks always want to sell a property in “as is” condition. Your offer should include an inspection. It is always in the best interest of the buyer to have an inspection done. Once the inspection is completed, you will have a better understanding of potential costs that are involved in completing the sale.
• Utilize the expertise of a real estate professional. This can be a very complicated process, and it takes a professional to work through and guide you on important issues pertaining to each property.
• Before making an offer, ask the following: Are there any inspection reports? What work has the bank agreed to? Is there a special “as is” form? How long does it take the bank to accept an offer? How does your agent deliver the offer? How long has the property been on the market? This is a very, very important question. Chances are that if the property has been listed under 10 days or 2 weeks, then you are very likely to run up against multiple offers.
• Offers are normally faxed to the bank. There is no formal presentation.
• Whether you are looking at bank-owned properties, short sale or homes for sale, you must be pre-approved. Every buyer needs a road map as far as what you have been approved for. If you go to the grocery store, you need to know what your budget is before you buy. If there is no budget, how do you know what to spend? The same stands true in purchasing a home. In today’s market more than ever, being pre-approved gives you the advantage in purchasing. If you are up against another offer, and that potential buyer has not been pre-approved, your offer is obviously more attractive.
Tricia Ackerman is an agent with Prudential Northwest Realty in Federal Way: TriciaAckerman@pnwrealty.com or (253) 335-8729.
