Calculate the cost of repairing damage to the house before formally negotiating.
Bank-owned property represents a real deal to a buyer who does her research and negotiates the final price. A bank may own property for various reasons, but bank properties are most often a result of foreclosure. If no one buys the property at the public foreclosure auction, the lender ends up as the new owner. Banks typically want to sell property as quickly as possible because of the extra responsibilities and costs associated with maintenance.
Instructions
1. Research the property. Contact local real estate agencies and ask for recent sales lists in the same area. Compare the property to similar properties -- such as the same number of bathrooms and bedrooms -- to set a range for the approximate market value. Note the property may have damage that lowers the value.
2. Contact the local tax assessor. Ask for a sales price history for the property and property tax information, including taxes due and the amounts.
3. Contact the bank. Ask for permission for a home inspection and appraisal. You typically will have to pay the inspection and appraisal fees. Bank-owned properties typically sell as is, but knowing the problems with the home and having the current value determined by a professional helps you set a reasonable offer range.
4. Schedule and attend the home inspection and appraisal. Contact local real estate agencies and the state real estate department for a list of names if you need to find a local inspector and appraiser. Ask the inspector and appraiser for written and signed reports.
5. Look at the inspection report, the appraiser's estimate of the current value, the approximate market value range and the tax data. Use the information to set a price range for your negotiations. Setting a price range stops you from overbidding on the property. For example, a $120,000 home that needs $50,000 in repairs becomes an instant loss if you bid over $70,000 for it.
6. Get a mortgage preapproval letter if you need a loan to purchase the home. The letter shows the bank you have financing. Apply to a local bank of your choice for the preapproval letter.
7. Prepare a written offer. Start with the minimum price you decided on. Include facts from the home inspection and appraisal reports to back up your offer. Note you have loan preapproval if needed. Send copies of the inspection and appraisal reports and the preapproval with the offer.
8. Review counteroffers from the bank. Note the bank's reason for asking for more money than you offered. Check the inspection and appraisal reports to see if the reports contradict the bank's reason.
9. Counteroffer with a price higher than before but lower than the bank is asking. Address the bank's reason for asking for a higher price and your reason for not accepting it. For example, if the bank is asking for $10,000 more than you offered because the home has a sunroom but your inspection report states the sunroom is seriously damaged, note this and the repair cost in the counteroffer.
10. Continue making and reviewing counteroffers until you reach a deal or hit the maximum price you're willing to pay. Consider adding concessions to your counteroffers, such as stating you will pay the closing costs, to entice the bank.
Tags: inspection appraisal, appraisal reports, bank reason, Contact local, home inspection, home inspection appraisal
