Hire a real estate company that uses a Buyer's Brokerage AgreementThe last thing you want to do is to go shopping for "a deal" and not be able to trust somebody for expert, correct advice. Hire a real estate company that is willing to put its buyer-services in writing and settle compensation issues up front. When your real estate company knows that it is getting paid, it will show you everything available (and many things not available). This is a huge point and it is why I've listed it in the first position. Most real estate agents and companies will work with you without such an agreement. I believe it creates a conflict of interest. If they know Property A will pay them 4%, and Property B will pay them 2.5%, and Property C will pay them 3%, do you really think that they will not be tempted to push the benefits of property A? It is not a factor if they get paid the same, regardless of what property is purchased!
Make A Compelling OfferIn a foreclosure situation, you are not dealing with a wife and husband who are going to make an emotional decision. For a bank or financial institution, the bottom line is everything. Don't be tempted to "low ball" and then let them use your offer to shop for others. This happens all the time. Low-ballers rarely get the buy, and when they do, they are always concerned that they over-payed. Make the real estate company do the homework. Determine what the property is worth and then make an offer that you are willing to stick with. Be willing to buy the house or walk-away from it, don't become a victim of emotion yourself.
Have A Quick Closing PeriodRemember, the bottom line is the most important thing to the Bank. Since time is money, a quick-closing is far more desirable to the bank than a long, drawn-out transaction. Additionally, a short-closing minimizes the risk from the Bank's standpoint. If you fail to close, they would rather it happen sooner than later. They already have owned the property longer than they wanted!
Buy The Property "As-Is"It never ceases to amaze me when buyer's offer to purchase a foreclosure, yet they ask the bank to warrant the condition. The bank is holding an asset that it has no opinion regarding condition, so it certainly will not warrant something that it is clueless about. By making the offer "as is," you are making it easier for the bank to accept. Just make sure that you have properly inspected the property and you are comfortable with its shortcomings.
Have A Bag Of CashWhile it is realistic that you will borrow money to purchase the home, there is no reason that you cannot have this secured ahead of time. Considering that the best buying opportunities in the market will have multiple offers, an offer that is not contingent upon financing will be viewed as stronger than those requiring the buyer to get financed. From the Bank's standpoint, you should appear as if you are making your offer with a bag of cash in your hands.
Limit ContingenciesPlacing contingencies on an offer to purchase a foreclosure is like telling the Bank (the seller) that you are not really serious. The bank then can use your offer to make the other buyers feel like they need to increase their bids. Why would a bank or financial company consider accepting an offer if it knows that you can back out of the deal? [The answer is they will only do it if you are the only buyer.... read that to mean that you are paying top dollar!!] The only contingencies that I would recommend would be for an acceptable appraisal, an acceptable site survey, title work, and a short 7-day or less inspection period.
Be Prepared And Look StrongThe moral of the story is make it easy for the Bank or financial company to accept your offer. If you look strong and you look prepared to close, your offer will shine above others (even a few that might be higher priced offers).
Happy Birthday Trent
If you happen to be in Charlotte, NC and bump into my brother Trent, please wish him a "Happy Birthday." He turned 46 years-young today!
As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible. Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market. If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email. Joe Manausa is a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.
Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.