Here are a few suggestions for buyers and their agents looking to purchase a Del Norte County foreclosure.
I have been working with many different banks and asset managers over the last few years and there seems to be a few common threads in this process:
- Don't low ball your offer if the listing is less than one month old.
I have not personally seen a bank accept an offer more than 98% of list price within the first two weeks.
What does that mean for you, the buyer and your agent? Do not submit a low offer if you really want the property.
The theory behind this, the bank has paid 3 real estate agents for price opinions and more than likely an appraiser as well. The asset manager knows their property is priced well (in most instances).
Also, in most instances, the asset manager is bound by the directives of the bank/investor who owns the home and they will not allow the asset manager to go below a certain percentage on price.
- Banks require that all buyers have a letter of pre-approval or proof of funds so submit it will the offer.
This is just good business sense. Your agent should have made sure you have this in hand before they show you ANY properties, not just foreclosures. Why waste time looking at properties, if you do not have the means to purchase. That is the surest road to buyer frustration I can think of. - Banks, in most instances, will not do repairs?
The bottom line for a bank is their net and will this escrow close? Inspections can affect both the bottom line and the buyer taking a hike. Don't get me wrong; buyer's need to know what they are purchasing, however, if you truly want to write a clean offer that has a better chance of acceptance, why not pay for your inspections yourself? - If you are asking the bank to pay for your closing costs, and the property is recently listed, you should mitigate the seller concession by raising your asking price.
So, the home is recently listed at below market value, you know their are multiple offers and you are asking below list price with a seller's concession? Why would you think this would work? I haven't seen it work yet. If a reader has seen this scenario work would you please leave a comment? Thanks. - Banks/Investors reserve the right of approval of all offers AND you are not in contract until the fat lady sends back the contract and bank addendum SIGNED BY THE POWERS THAT BE at the bank.
THE LISTING AGENT WILL CONTINUE TO SUBMIT OFFERS AND THE BANK WILL LOOK AT THEM UNTIL THERE IS A FULLY EXECUTED CONTRACT. I know this is frustrating, but there it is. Ask your agent to quickly convey all counter offers and quickly sign and respond to them. This should keep the process from dragging out.
A few other suggestions:
- Use a full time agent- I can not stress this enough. Don't you want someone who is working at this full time? You need someone working on your behalf that is accessible and can quickly respond to your needs. Many an offer is lost because the agent was unavailable.
- It isn't personal - The bank isn't picking on you if they countered and you accept, but in the mean time a better offer is submitted and they choose to go with that one. Remember, it isn't over until the fat lady sends back the fully executed contract. Your agent needs to understand that so they will stay on top of things.
- The bank isn't necessarily the bad guy - Out of my last 7 REO listings, 5 have been investors who continued to take their tenants rent knowing they were going to lose their property (many investors own more than one home), but didn't bother to say anything to the poor tenant. Guess who is left to deal with that. Yep, me. All that to say that the bank, in many instances is already losing quite a bit of money in dealing with tenants, personal property left in the home and disgruntled owners who "stick it to the man" by trashing the home on their way out the door.
So there you have it. If you are coming to the sand box, you better be ready to play. Have your proof of funds letter or pre-approval letter in hand, expect to pay for some inspections and pay above list price if you are asking for a seller's concession. If the home is extremely desirable, be ready for multiple offers. Best of luck to you in your purchase.
Thank you for stopping by. Your comments on this post are welcomed and appreciated.
No one sold more homes in Del Norte County in 2009--*both in number and volume--than Fran Gatti. Put Fran to work for you!
 |
Brought to you by Fran Gatti at |
*PER CCMLS
Great advice Fran, lots of people have no idea how to go about their offers for these properties and get turned down. Good to see some tips and pointers out there!
Excellent post Fran. Too many buyers (and agents for that matter) see the "REO" listing and automatically assume they can low-ball, then they lose out on the house because of bad advise from their agent. It's wise to pull comps and come in as close to asking price as possible.