5 Tips For Buying a Foreclosed Home

After turning on the T.V. this week I felt like grabbing all my money and heading for the hills.  But when the dusts settles a little bit and the panic recedes, there is going to be a ton of opportunity.  And a perfect example is REOs or Bank Owned Homes.  As you can see in an article recent article on defaults in Utah, bank owned homes are expected to rise soon here in Utah.  So here are 5 tips to help you make the best of the market.

1) Know Your Seller
Banks tend to become habitual in the way they sell homes.  With a savvy agent you can research the seller and see some trends.  Does this seller always do 30 day price reductions?  If the answer is yes, then maybe you want to wait a few more days until the next price reduction before you put in an offer.

2) Sell Your Home
Banks are not going to want to wait around while you sell your home.  They are losing money every day they have the home on their books because of costs associated with "carrying" the home or carry costs.  These costs can be quite high and they include things like maintaining the property, paying attorneys, and paying interest on money owed.  The main reason they will let the property go at a discount is so they can avoid these fees.  This purpose is defeated if they have to wait around for you to sell your home.

3) Get To Know a Contractor
It is highly likely that your home is going to need some work.  The bank likely did some minimal repairs to put the home on the market but it may take more to make it livable.  Remember that this home was foreclosed on and the last people to live there were probably not too happy on their way out.  Anticipate doing at least some minor repairs like new carpet and paint

3) Don't Forget to Negotiate
Just because they are a bank owned home does not mean that the banks will not negotiate.  They are a seller just like any other.  And sometimes they are more motivated than most sellers.  In fact, many markets in the U.S. are currently "REO Driven" where REOS are the ones selling and are the price setters.  So don't hesitate to throw in a low ball offer.  Just don't make it so low that you end up wasting everyone's time.

4) Make it a Clean Offer
The cleaner the offer the better.  You can still do an inspection and have the property contingent on financing, but be careful to add too many contingencies.  Also, offer at least 1% of the purchase price for earnest money and be flexible on settlement dates.
 
5) Get Set Up With a Just Listed Auto Email
Since many of these properties are going to sell quick, you want to be the first to know about them.  Click here and indicate that you are looking for foreclosures and the area you are interested in.  then you will get homes emailed to you the day they come on the market.