How To Make An Acceptable Offer On A Bank Owned Property
In today's real estate market, most banks have more houses in their inventory than they can handle. They are selling more houses than anyone else in a market with very few buyers.
Making offers that these banks accept is therefore important whether you are a real estate investor or a regular home buyer.
These tips will help you make successful offers to the banks and buy REO houses cheap. In today's real estate market, most banks have more houses in their inventory than they can handle. The are the leading home seller in a market that has very few buyers.
Making offers that these banks accept is therefore important whether you are a real estate investor or a regular home buyer.
Follow these tips to successfully buy REO properties cheap.
1) Get pre-qualified
Any time you are buying properties from a bank, you must show proof of funds, either in cash or load pre-qualification.
The bank will not consider your offer until you get this, so this should be your first step.
2) Get a good real estate agent
Almost all, if not all, bank owned houses are listed for sale by Real estate agents. You must therefore make any offer through the Realtor.
You therefore need to get a Real estate agent working for you to make an offer.
3) Do your due diligence
Lots of the properties the banks have need little or no repair. A good repair estimate is a must when buying these properties. This will be helpful to negotiate a better price.
Of course, you must have conservative comparable sales to back your offer if necessary.
4) Order an inspection
Consider this a must when buying a REO property. Banks will not fix up houses, but a happy to give a discount for repairs.
Make sure to put an inspection clause in your contract.
Most likely, you will discover problems you were not aware of from the inspection. This would be a strong bargaining point with the bank which should also bring down your offer price.
If your offer requires the bank to fix the property, it will be rejected. You buy this type of property as is where is. Ensure your contract shows this. They will offer discounts based on needed repairs.
5) Other costs
If the home is in a community where there is a home owners association, make sure that all dues are paid up, and your fees will be prorated from the day you own the property. In foreclosed properties, it is common for fees and fines to accumulate.
These costs should be credited at closing.
Also make sure all taxes are paid. Make sure you receive a prorated credit at closing.
Make sure there are no previous uncleared utility bills. Be sure to clear these.
6) Make offers lower than the asking price
Banks are willing to negotiate. Always make an offer lower than the asking price. Properties that are older in the market will be more discounted than those that are just listed.
Avoid offering less than 90% of the asking price. And if your offer is not accepted, you can make a higher offer depending on the bank's counter offer.
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