Buying a foreclosure offers definite benefits to first time homebuyers that want to get into the market. Once you decide that a bank-owned property is the right option for you, we recommend that you consider some of these dos and don'ts.
- Do your homework first and find out how much house you can afford before you shop
- Get pre-approved for a home loan
- Get a referral for a real estate agent who has experience working with REOs. You want to work with an agent that is saavy about the competitive bidding process.
- Identify the neighborhoods in which you are most interested
- When you find a property you like, ask your agent to find out the bank's purchase price and the price the bank is asking in order to determine a fair markets value
- Have your agent compare the listing agent's history of listings to pinpoint his track record for list-price to sales-price ratio
- Find out how many offers are on the REO home
- Make sure you have a preapproval letter in hand from your lender before you make an offer
- Make sure your agent asks for a contingency clause that allows 17 days to get an inspection and seven days to get a loan approval.
It's not uncommon for desirable REO homes to get a dozen offers. It's also not unusual for the bank to narrow the field of competing bids to two or three offers and require the remaining interested parties to submit their highest and final offer. Going into the negotiation with a "highest and final offer" mentality will enable you and your agent to beat out the competition.
- Why Buy An REO?
- Tips For Buying An REO
- Connecting With An Advisor
- Financing Options That Work Best for REO Buyers
- How To Seminar Events