How to Buy a Foreclosure

How to Buy a Foreclosure

When it comes to finding and buying a bank-owned home, it can be very difficult and very stressful for buyers. Over the past year, the “supply of bargain-basement, foreclosure homes shrank, as banks temporarily stopped trying to repossess properties to review possible paperwork errors” (Florida Realtors). This decrease in supply has created an increase in demand, which will  dictate a different attitude that banks have in foreclosure filings in 2012. According to an article by Florida Realtors, “lenders are starting to resume foreclosure filings, so more of these distressed homes are expected to be listed for sale” (Florida Realtors).

This demand for foreclosed properties means that the limited supply that hits the market in 2012 will not be available for long. In order to have the best chance at buying one of these foreclosed homes, buyers must exercise their due diligence  and make offers that “stand out from the competition” (Florida Realtors).

Your Suncoasteam is ready to provide you with free help to find foreclosures that hit the market in 2012. All you have to do is go to https://suncoasteam.com/mls-search-form and simply change the “Selection” to “Foreclosures Only” and you can see an entire list of the foreclosures that are on the market. After finding a property that interests you, simply contact your Suncoasteam and we will provide you with any additional information that you may need.

However, finding a foreclosure is just the beginning of the purchasing process regarding bank-owned real estate. Actually buying the property is a whole other battle and your Suncoasteam wants you to be prepared so that you have the best chance at “impressing” the bank in order to beat the competition.

According to the article by Florida Realtors, it is suggested that buyers “offer the most they feel they would ever pay for the property” (Florida Realtors).

Additionally, “paying up” can be an effective strategy to impress the banks and give buyers an inside track at beating the competition. Making a “hefty good-fath deposit” is one way to stand out against all others vying for that same piece of property (Florida Realtors). The article by Florida Realtors states that “a typical buyer puts down $1,000 to convey interest. Buyers who want to impress the bank may want to offer substantially more” (Florida Realtors). Naturally, the more cash that a buyer can put down, the more attention they will get from the bank. Comparatively, it is not unheard of if a buyer puts down cash for the entire purchase price, since that full amount will be paid in a few weeks at closing (Florida Realtors).  There is, however, a risk associated with this strategy. The buyer risks the deposit if they have to back out of the deal for any reason that is not stated in the contract.

One way to combat these risks and have the best chance at beating the competition is to volunteer to close quickly with the bank and to turn in ALL documents and paperwork when submitting offers. Another useful bit of information would be to “stand firm: [and] don’t cave in to unreasonable demands” (Florida Realtors). Buyers should be aware that banks may try to get them to close so quickly that the bank may tell buyers that they have to “waive their right to a home inspection if they want the property, because so many bidders were interested ” (Florida Realtors). Though it is ultimately up to the buyer to waive a home inspection, this does not always guarantee that they will get the property. Getting a home inspection is something that all buyers should do before purchasing a foreclosed property.  Often times, the previous owner may have left the home in such a state of disrepair that it would be a disservice to a buyer to not have a home inspection conducted. It is much better to walk away from a deal that makes you uncomfortable than to be “railroaded” by a foreclosure bank. Discuss the deal with your agent, have a strategy and make a measured decision.

While purchasing a foreclosure seems like a way to get a great deal on a piece of property, there are risks, time, and a great deal of competition for foreclosed properties. Buyers must be knowledgeable, patient, and know their rights when going through the process of purchasing a foreclosure. With the assistance and guidance of a real estate agent, buyers will be better prepared to battle the banks and get the best terms possible when buying foreclosed real estate.

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