10 Things To Know Before You Buy A Bank Foreclosure
1. In order to make an offer on a Bank Owned Property, you must have the following ready:
•Pre-approval letter stating that the income, assets, and employment have been verified.
•Proof Of Funds (statement showing account balance)
•Cleared Deposit check of at least $1,000 or sometimes up to 3% of the purchase price (fully refundable prior to end of review period)
•Fully Signed and completed Contract for Purchase and Sale with no financing contingency (cash offer)
2. Can I use my own closing Attorney?
Typically, the bank will require you to use their Attorney for the closing. They have already researched the chain of title, and are familiar with the bank regulations.
3. What if my lender cannot close on time?
You will be charged late fees for any extensions beyond the closing date as agreed upon in accepted offer. This is why it is imperative that you are pre-approved.
4. How did the Bank arrive at the asking price and is it a good deal?
The Bank will consult with their real estate agent and set the price at full market value based on condition of property. The list price has nothing to do with the price the bank will accept. We will research prior mortgages on the property and any other REO's that have closed in last 6 month in vicinity of the subject property.
5. If there are multiple offers, how can our offer stand out?
Having a larger deposit, waiving the financing contingency and showing proof of funds will get the Bank to want to work with you, even if your offer is less.
6. Choose the right experience real estate agent
Make sure that the agent you choose to work with is:
•Experienced in working with banks,
•Represents you as a single agent,
•Knows how to structure deals to make sure you are protected,
•Has purchased foreclosures themselves.
7. What if the property needs work?
The Bank WILL NOT make any repairs and sell the property AS-IS. For this reason you have a review period (usually 10 to 14 days) to make sure the property is suitable. Some are perfect condition, some are terrible condition. Either way, you should do a home inspection after your offer is accepted.
8. Can’t I see the property before making an offer?
Yes! Make sure you have an experienced agent that has closed many foreclosed properties guide you thru the whole process. Usually the bank will not not accept offers in the first 7 days and no investor offers until after 21 to 30 days that property has been on market.
9. What if I don’t like the property?
You typically have 10 to 14 days to review the property, perform any inspections necessary and decide if you like the property. Your deposit is fully refundable within the review period.
10. How much will the bank take?
Typically the bank looks for a price that is within 5% of the asking price. If the bank is asking $350,000, and you offer $280,000, it is almost certain that the bank will reject your offer, give you a counter close to list price or might not even counter back to you. The rule of thumb is that if the bank would accept $280,000, then they would ask close to $280,000. If they don’t get their price, then they will lower it every few weeks.
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