Making an offer on a foreclosed home is a little different than when buying a home from a typical seller. Banks do things differently, and often foreclosures are priced well enough to attract several buyers at one time. A bidding war can ensue when this happens. By taking some precautions and necessary steps to making an offer on a foreclosed home, you can increase your chances of buying the home.
Instructions
1. Call a licensed real estate agent or broker in your area to view the home inside and out. Banks will enlist the help of professionals to market and sell their home; you will need a real estate agent to get you inside. A bank also sells their homes "as is," so you want to make sure of the condition of the home before making an offer. Getting inside is critical to knowing your next step.
2. Visit a loan officer to determine what you can afford to pay for a home. Make sure you have enough cash, not only for the purchase, but for any repairs needed as well. Most foreclosed homes need repairs and maintenance, especially if they have been vacant for long. Discuss finance options with your loan officer, as you may be able to receive extra funds to do the repairs. FHA has a special program to incorporate repair money into the loan, and other banks will offer programs as well.
3. Check with local sales to determine what is a fair price to offer on the home. Your real estate agent can run comparisons, or you can do it yourself utilizing public records.
4. Write a contract to purchase the home once you have your approval from a loan officer and have determined a fair purchase price. If there are multiple offers on the home, make sure your offer is as strong as possible. Go in with your top price to begin with, instead of looking to negotiate. You don't want to lose the home over an offer that is a few dollars more than yours. Another thing banks look at when selling a foreclosed home is the closing date. The sooner you can close on the home, the better.
5. Include an earnest money check with your offer. Check with the bank to see if it has a minimum requirement for earnest money. The more you can put down, the better. This money will come off of the purchase price of the home, so you will get credit for it. If the deal falls through, you will receive the money back, unless you opted to back out of the deal for no reason. In that instance, the bank may elect to keep the earnest money as compensation for its hardship.
Tags: earnest money, estate agent, foreclosed home, loan officer, real estate
