A portion of the housing market is comprised of bank-owned properties.
Buying foreclosures, or bank-owned properties, is often perceived as taking advantage of outstanding real estate bargains. Foreclosures, known as REOs, are considered to be investment properties priced far below market value, but such is not always the case. Foreclosure is an expensive process and the loan balance the lender will attempt to reclaim is often near or above market value for the property. Mortgage lenders are not in business to sell houses, and they do negotiate selling prices with interested buyers REO properties.
Instructions
1. Meet with a mortgage broker or mortgage lender to get qualified in advance for a home loan. Find out exactly how much you can borrow before looking at properties and prices.
2. Hire a mortgage broker or real estate agent with experience in the REO market to help you find worthwhile investment properties. Ask your broker or agent to make aggressive offers to purchase bank-owned properties in marketable condition.
3. Look at the homes and surrounding land before attempting to purchase REO properties. Make a note of any and all repairs necessary, and any improvements you see fit before attempting to market or occupy the property.
4. Make an offer well below the price you would reasonably consider paying for the property. Banks and mortgage companies will often counter your offer with a price that may seem ridiculously high in an attempt to reclaim their losses on the foreclosure. Counter that offer with a price close to your desired purchase price. Do not agree to pay more than you hope to for the property during price negotiations. A counter reply of "no thanks" may bring the lender down to your price.
5. Place contingencies on your offer. Make it contingent upon the home meeting an inspector's approval and include any necessary repairs and improvements you have noted. Put all such stipulations in writing. Both you and the lender's loan officer should initial each one.
Tags: bank-owned properties, attempt reclaim, before attempting, investment properties, market value, mortgage broker, offer with
