Buyers can negotiate with banks on the prices of foreclosed properties.
Buying bank-foreclosed property can result in significant savings. However, just because a property is a foreclosure does not mean the asking price is necessarily a bargain. There is not a set formula to determine an offering price for a foreclosure. Buyers must determine an offering price for each property individually. To determine what to offer on a foreclosed property, buyers must take into consideration a number of factors, including the condition of the property and the local real estate market.
Realistic Offers
Buyers of foreclosed properties should have reasonable expectations. In markets flooded with foreclosures, buying properties at 40 percent below market value may happen, but most will sell at about 10 percent below market value. In many cases, making offers significantly below the asking price will be a waste of time and effort. While banks may provide a counteroffer to a low offer, offers that are unrealistic may not generate a response. Agents may also lose interest in dealing with a buyer who is not willing to make reasonable offers on foreclosed properties.
Property Condition
The condition of the foreclosed property will have a large impact on the value of the property. In order to make a reasonable offer, a buyer must thoroughly inspect the property for damage and needed repairs. Foreclosed properties that have sat empty for long periods of time may have significant damage from neglect. If the buyer determines that the condition of the property and the cost of expected repairs makes the asking price too high, the buyer can use this information to negotiate with the bank to lower the price for the property.
Time on Market
Banks want to sell foreclosures as quickly as possible and may accept lower offers to move properties off of their books. The longer that a property stays on the market, the more willing most banks will be to negotiate the price. The average time that it takes to sell comparable property in the local market, especially foreclosures, will also affect how willing a bank is to negotiate on the asking price. Real estate agents can help a buyer to determine how long comparable properties take to sell.
Professional Assistance
Hiring a real estate agent with experience in foreclosed properties can help a buyer to get the best deals. Many real estate agents have connections with banks and other financial institutions and will know how much negotiation room a bank prices into the properties. Real estate agents may even know about foreclosed properties before they are listed, helping buyers make an offer before others find out about the property. To locate an experienced real estate agent, look at the local foreclosure listings and look for agents listed on multiple properties.
Tags: asking price, foreclosed properties, estate agents, below market, below market value
