Once you have found a foreclosed home that you want to buy, writing a bid on it is the next step. Foreclosures are desired by those who want to find a deal on their primary dwelling, as well as real estate investors looking to pick up a new investment property. To write a bid on a foreclosure, you must gather as much information as you can on the bank that is offering the home for sale and act immediately. Those who wait, often find they have lost the home to another bidder.
Instructions
1. Meet with a Realtor to inspect the interior of the home. Any local Realtor should be able to gain access to the property. You will want to know the condition of the interior to calculate your bid. If the home needs extensive repair, you will want to consider whether you can afford the house and the repairs. Be sure to come up with an accurate dollar amount of repairs. If you need to, ask a contractor or handyman look at the property and give you and estimate.
2. Call a loan officer to discuss your options for financing the property, or meet with your banker to request a proof of funds letter. You will need either a a pre-approval letter from your lender or proof of funds letter from your banker to submit with your bid for a foreclosure. This will show the bank that owns the foreclosure that you are serious and able to buy the home. Without one of these, your offer may get not consideration. If you meet with a loan officer, inquire about special financing for foreclosed home and homes that require repairs.
3. Ask your Realtor to find out of if there are multiple offers on the home. This often happens with well priced foreclosures, as there are investors looking to buy them as well as potential homeowners looking for a bargain. If you know in advance that there are more offers on the home, you will need to write a strong bid on the home from the start in order to have a chance.
4. Sit down with your Realtor or write up your own bid on the foreclosure. Keep in mind, while price is an important factor in the bid, so are terms. You will need to include dates for closing the deal, usually 30-45 days if you are obtaining financing. If you can pay cash, closing can happen in 7-10 days. The sooner you can close the deal, the better. Also, if you are requesting to have inspections done, a timeline needs to be included in the offer, typically within seven days of an accepted offer.
5. Include an earnest money check with your bid. Find out of the bank has a certain requirement for this. Usually they set a minimum amount, and you will want to include at least that. If you can raise that by $500, you will stand out from others bidders who only include the minimum. This shows the bank that you are a serious buyer. The money will come off the purchase price of the home. If the deal falls through by no fault of your own, you will receive the check back.
6. Submit the offer immediately to the appropriate person. Time is important here, so don't delay. Most banks accept offers electronically or via facsimile (fax). This is where your Realtor can come in handy, as they often know the best way to work with these banks. Once your offer is submitted, sit back and wait. Response times from banks regarding foreclosures can take several days.
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