Assess your Chances of Bargain Bank Foreclosures

By: philip smith

There is so much information available right now about REO homes (they include bank owned or bank foreclosures) and most of it implies that with lender inventories loaded, a buyer is bound to get a bargain. While it may be true that an experienced investor has made his fortune from buying with good discounts, renovating and selling on at retail, you and I seeking more for our money in our quest for a family home are going to need some basic education, a few smarts, a great realtor, dedicated persistence to the task at hand and a modicum of luck to reach our goal.

There is a lot to learn that is unique when buying in this market, it's always best to know enough to understand why your realtor recommends a particular property, or why your mortgage company won't lend on a particular house.

Your offer may not fit within the bank's preset price limit; the more foreclosed homes they have to sell, the more pre determined factors will exist in the REO asset management departments. Be prepared for several bids, or bids and counter offers before you succeed in getting the property at your price, at a discount that recognises both the condition and the market, and means it was worth your persistence.

Key to your finally cementing a deal for a foreclosure that really did win you a home you couldn't have afforded otherwise is your offer price. It must be based on your own Appraiser's report. Bank foreclosures will be 'as is', they may be fresh into the realtors' listings, but are unlikely to be freshly vacated by caring former owners. You must supplement other reports offered with your own licensed appraiser's complete appraisal report. Your realtor may indicate a recent BPO, this isn't sufficient reassurance on it's own, a brokers price opinion is an assessment of market value usually undertaken by the broker's office, and can be as straightforward as an analysis of comparative sales, past appraisals and a drive-by. To minimise financial risk and feel thoroughly informed about all repairs and replacements and their cost to you, you need to pay for your own appraisal. If you need to pre qualify for finance, then you lender will need an appraisal. A useful tip I heard was that the buyer should make sure to inspect a property as close as possible to the day of submitting the offer; empty homes can be damaged or pilfered just before you own them.

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