5 Surefire Ways To Let That Foreclosure Slip Through Your Hands
This blog article is prompted by something I saw at Trulia Voices the other
day. A buyer was lamenting the fact that he had lost out on a foreclosure bidding war and of course, blamed his agent. Not knowing the specifics of the situation, it could be that his agent was inexperienced in REO bidding. But I find, more times that not, the buyer has unrealistic preconceived notions about purchasing a foreclosure that proves to be the real problem - too many late night "get rich quick" real estate infomercials.
1.Don't Get Pre-qualified
ALL bank foreclosure and HUD home deals that I am aware of require that the prospective buyer be pre-qualified with a reputable lender before they will consider your offer. This is a no-brainer. It is so easy to get pre-qualified there is no excuse for not doing so.
2.Sleep On It Too Long
If you are looking in a specific area because of the GREAT neighborhood, GREAT schools, GREAT (fill in the blank), then guess what - so is everybody else! If you find a foreclosure home in a desirable area that is priced right - it's not going to last long. While you are sleeping on it, someone else is writing the offer that is going to buy it.
3.Make a Low-Ball Offer
I know you want to get a good deal and if the home has been on the market for over 90 days, this might be an acceptable tactic. This may also work in certain very depressed markets. But, if the home just came on the market yesterday and is in one of those desirable areas, don't wasteeveryone's time. The bank doesn't care that you think they should be happy you are going to take it off their hands for 50% of the list price. Here lately I have seen foreclosure homes being priced under market value in order to encourage multiple bids. And it works. The selling price ends up being over and above the initial listing price.
4.Refusing Involvement in Multiple Bids
If you are trying to purchase a well-priced foreclosure home with only cosmetic defects in that GREAT area of my market, be prepared for a multiple bid situation. That's just reality. Usually the listing agent will provide a form that discloses you are in a multiple bid situation and gives 3 options: withdraw your bid, amend your bid or keep your bid the same. Its called the "highest and best" form. Here is what I advise my clients. Before we even make the offer, I want them to have a number in mind that is their "highest and best". If we find ourselves in the multiple bid situation, we already know what we can do. I know it's difficult, but try to think about it logically. If you hold out here to try and save a few dollars and lose out on the house, you will be kicking yourself later on. If you went with your pre-determined highest and best offer and you still lose out, at least you know you did all you could. Only you know your comfort level when it comes to how much you are willing to pay for a certain house. Don't feel bad about making a wise financial decision for your family. There are other homes!
5.Not Listening To Your Agent
If you are working with an agent (preferably a REALTOR) who is experienced in the oddities of purchasing foreclosures, LISTEN TO THEM! They will do market analysis on the area to see how the foreclosure house you want stacks up. Quit listening to those national real estate "gurus" who don't know the first thing about your local area.
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