Finding a property to purchase prior to foreclosure can help the seller protect her credit rating.
The cost of maintaining a property can be expensive for a homeowner. Managing mortgage payments adds to the financial burden. For some, the situation may be unmanageable. Instead of going bankrupt, the right decision may be to allow the bank to reclaim the home through foreclosure and resell it. For buyers there are opportunities to purchase properties at a great deal if you negotiate skillfully.
Negotiate Based on the Home Inspection Report
Properties in foreclosure may not have had funds to maintain repairs. When you are negotiating the price on a foreclosed property, the need for repairs shown on the home inspection report can show you some areas where the price can be reduced. Get estimates on what it will cost to make the repairs for a negotiation based on facts. Ask for a home inspection contingency in which you buy the foreclosure only after the home has been inspected for termites and mold. If it is not satisfactory, you are entitled to cancel your offer.
Negotiate Using Your Financing Strength
Leverage your financial strength before entering into negotiations by getting pre-qualified for a loan. You may be able to convince a seller of terms that suit you if the seller knows that working with you means guaranteed financing, rather than the seller risking someone whose financing may fall through unexpectedly at the last moment.
Negotiate a Pre-Foreclosure
When a lender reclaims a property to be sold, it is under foreclosure. In some cases, you can negotiate an offer on the property before the foreclosure, as a pre-foreclosure. In this way, you would be helping the potential seller protect her credit rating by preventing a foreclosure. Through word of mouth, you may be able to find properties in need of a buyer and you can negotiate directly with the seller for terms based on condition of the home, repairs and fair market value and at a price less than the actual balance remaining.
Be Prepared to Negotiate
Prepare in advance for your negotiation by making a list of questions to discuss with the seller. To get a sense of the demand, find out how long the property has been on the market in total, not just the date it was re-listed, and how many offers have come in. If any contracts fell through, ask if it was due to the inspection report or financing. It is important to know about any structural or environmental problems and the condition of the property.
Tags: credit rating, home inspection, protect credit, protect credit rating, seller protect, seller protect credit, seller terms
