You can save BIG money by buying a foreclosure home and utilizing these 7 key steps. You can take these steps to any realtor, in any marketplace and get amazing savings. The best part is, if you utilize these 7 steps, they’re simple and you’ll save lots and lots of time and money.
You have to be aware of a couple pitfalls in buying a foreclosure. Being hasty and jumping on the first deal can cost you a lot of money. However, good deals go fast, so be ready to act if you like the home. If you do find that one home that you absolutely know you love; you can see yourself in and know it’s the right one, don’t sit back and wait too long. Foreclosures tend to sell fast, so don’t sit on your hands if you know for sure that this is the one! You can save 20-30% off of the current market value if you’re ready and prepared to take action.
Key Step 1 – Look for overpriced properties. Now that statement probably confused you. You’re probably saying, “Why would I want an overpriced home?” But let me explain. Banks and sellers overprice homes. This means that they stay on the market for months and months. The bank gets fed up with having this property over their heads and on their books and it’s not selling because it’s overpriced. You make an offer and the bank is tired of sitting on the house for 8, 9, 10 months. They will end up taking your offer fast. Here’s a perfect example. There was recently a $1.1 million home on the foreclosure market. The house was on the market for 10 months and the bank was really tired of holding onto this money pit. The home sold for only $360,000! The home was on the market for 10 months for $900,000. It was obviously an overpriced home for the market, the bank overpriced it hoping that getting a $1.1 million home for $900,000 would look enticing and nobody took the bait. When the bank got the offer they jumped on it! Take a look, have your realtor go out there and look for some overpriced properties to check on; especially ones which are overpriced and have been on the market for a while.
Key Step 2 – Can you make repairs? The bottom line is if you can buy a home for $150k and the home is valued at $200k; you invest $10k in repairs then you’ve made a savings of $40k. That is 20%-30% in savings. It will take some work on your part though. You have to realize how long it’s going to take you to make the repairs to save the money. Here’s a perfect example. There’s a home on the market that would cost $900k to build it and it’s listed for $300k. The house needs $50k repairs on this house. So in the end it’s well worth it to get a $900k home for $350k!
Key Step 3 – Do other buyers want the neighborhood? The bottom line is that a good neighborhood generally means long term appreciation. Does it have good school zones? Is it close to shopping? You do not want lots of foreclosures in that area because that means your home value will go down. Are there builders still building in the area? If so this will also decrease the value of your home. But the key here is that there is always one area of town where people want to live; however this area will have a lower appreciation because more people will buy and retire to this area of town. This makes the area a more stable area, so it has a lower appreciation. This means you have to be careful and find a happy medium between the two extremes. Find all this out and ask yourself if you’re going to be happy and willing to live there for the next 5-10 or even 15 years of your life.
Key Step 4 – Financing. You really need to be pre-approved for your loan or be ready to pay cash. Bank homes require a firm pre-approval or cash payment to buy their homes. Banks will sell a home for less money to someone if they know the buyer is “A+” which means that they are either paying cash or have a firm pre-approval. What they care about is getting money quick, as opposed to getting more money slower. So you absolutely must be firmly pre-approved for a loan or have cash to buy from the bank immediately. The bank simply wants to get rid of these homes and get them off their books.
Key Step 5 – Make an offer at the end of the month. The banks have deadlines and goals to reach. They need to sell a certain amount of homes each month and there are bank employees out there that get paid bonuses for reaching these goals by the end of the month. So many buyers want to close by the end of the month so they make an offer at the beginning of the month. Be willing to close any time of the month. This can mean a savings of 10%-15% on a home!
Here’s a key piece of knowledge to carry with you also. November and December are one of the best months to by ANY type of home; bank or non-bank. People set goals of wanting to have this done by the end of the year and they’ll often take lower offers.
Key Step 6 – Read between the lines. Bank agents are overworked, plain and simple. Because of this they don’t put full details on the listing information. They have less pictures and less info that they offer. Drive by the outside and check it out yourself because often it could truly be that “Diamond in the Rough” that could be just what you’re looking for and you can get a great deal on it.
Key Step 7 – Stop getting shoved around by the bank. If every one of these bank homes are going like hotcakes, then consider going with a normal seller home. Most sellers and Realtors understand that they have to compete with bank homes today, so they are willing to take lower offers. In most areas 70% of all homes sold are done with normal sellers and not bank owned homes. So don’t get caught up in this tunnel vision of wanting to buy nothing but a foreclosure home because you’re going to get the best deal. Non-bank owned sellers will consider offers also. They understand that they may have to take a little lower price, as long as it’s realistic, based upon the fact that there are many bank homes out there that are willing to sell for lower prices. Make sure that your agent brings in a good market analysis to prove your offer. Make sure your agent comes in with all the guns loaded and can prove why your offer is reasonable and acceptable. That’s their job.
The reason I am providing this offer at no cost is that I want to get this information out there into the marketplace. If I can get this information out there, everybody wins. More homes sell, more buyers come into the market, and when buyers and sellers are knowledgeable about the business it’s a win/win situation for us all. It’s all about YOU getting a good deal. Of course, I love what we do. Selling homes is our passion. It’s also how I make a living and how I pay my bills, so if you need an agent and you would like help in buying a foreclosure give me a call at 858 225 7385. I hope you enjoyed this free information and I hope you get a great deal when buying a foreclosure because you are now going into it with a little more knowledge and information.