In today’s real estate market, most banks have more houses in their inventory than they can handle. The are the leading home seller in a market that has very few buyers.
To buy these properties, you must learn how to make offers that these banks will accept.
Here are some tips to help you buy properties from banks cheap.
1) Get pre-qualified
Any time you are buying properties from a bank, you must show proof of funds, either in cash or load pre-qualification.
This must be your first step because no bank will talk to you without it.
2) Get a good buyers agent
Most bank owned properties are listed in the MLS by a real estate agent. Your offer will have to go through this Realtor.
You therefore need to get a Real estate agent working for you to make an offer.
3) Do your due diligence
Most bank owned properties need little to no repair. You must do a good repair estimate. You will use these to negotiate a better buying price.
Some conservative comps will be necessary to negotiate a lower price.
4) Order an inspection
You must get this when buying bank owned property. Banks will rarely fix up houses, but will offer them at a discount when possible.
Put an inspection clause in your contract to get you covered.
Most likely, you will discover problems you were not aware of from the inspection. You will need these to get your offer price lower.
If your offer requires the bank to fix the property, it will be rejected. Your buying terms should be as is where is. Ensure your contract shows this. They will offer discounts based on needed repairs.
5) Other costs
If the home is in a community where there is a home owners association, make sure that all dues are paid up, and your fees will be prorated from the day you own the property. Fees and fines are common in foreclosure properties.
Ensure you get these fees credited at closing.
Similarly, make sure there are no back taxes owed. Make sure you receive a prorated credit at closing.
Lastly, make sure the utilities are paid up; you could be stuck with huge bills that were not cleared by previous owner. Make sure these are cleared.
6) You offer should be lower than asking price
Banks are ready to negotiate. Always offer lower than the asking price. Properties that have been sitting in the market for a while will be more discounted.
Avoid offering less than 90% of the asking price. And if your offer is not accepted, you can make a higher offer depending on the bank’s counter offer.
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