This is a series of tips of buying bank-owned properties. Please feel free to ask any questions.
1. Decide if buying a bank-owned property is the right approach for you. Do you want move-in condition, fixer or rehab?
2. If you are working with a licensed real estate professional, make sure this person knows how to write offers that will be viewed favorably and will be a clean contract. Despite how many times I've advised an agent on writing a winning offer, he would still do what he wants to do. Some are actually offended that I try to help them.
I know some of you might still have friends and relatives in the real estate business and yes, it would be hard to refuse to allow them to represent you, but consider having them refer you to someone who has more experience or at least more intense knowledge of the process so you will have less headache and less drama in your life. (I oftentimes wished that the agents presenting the offers would have just referred their clients to me because they tell me they have not done this before, I shake my head because what they are doing is not in their clients' best interest). And so much time is wasted. On contracts that fell apart, we could have closed so much easier and so much sooner if those agents weren't so concerned about making less money.
3. Make sure you are ready to offer full asking price. The list price is already valued by a broker/agent who has done a thorough analysis (just like an appraiser would do) of the local real estate market, condition of the property and buying trends. Some banks are more stubborn than others, but oftentimes, the banks will listen to us, the listing agent or the agent that priced the property for them.
4. It is not true that banks are taking a long time. It's the agent you are working with!
5. Yes, you can get great deals at auctions. Make sure you have competent representation, otherwise you will be overwhelmed, unless you've done this many times before and you are aware of the rules of the game. I've attended auctions where the previous value of homes were misprinted and there is so much speculation, everyone becomes an expert. You need a competent licensed professional if you are a serious investor because everything factors into your profit margin. The licensed professional should also be knowledgeable of the auction, financing and closing process. That will be your surest bet to getting excellent deals at auction, especially auctions where there are reserve bidding prices. What does that mean? That means even though you have the winning bid, you might not actually have the property because the bank rejects the winning bid. Does that make sense? It takes a very good, very knowledgeable licensed real estate agent to know if a bank will sell below the reserve price.
6. Whatever you've heard on late-night TV shows and "low-ball" offers -- disregard. It does not happen in every real estate market for every type of property.
Please feel free to ask any questions.
-Susan Vanderburgh
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