I thought the below description of how to bid on REO/foreclosures or short sales was a good description of what it currently happening in the market. Thanks to Antonio & Alexia Cardenas "The Realtors In Motion"- for writing it.
Seven Golden Rules For A Successful Bid On a House"First time home buyers are looking at a market that shows no mercy, is highly competitive and does not reflect the conditions of a so-called "depressed real estate market." It is not easy to find a good house at the entry level without having to compete with other buyers, but with persistence, good preparation and the help of a professional local Realtor your chances of becoming a homeowner are better. Above all, be realistic, your very first house is not your "Dream House" but getting on the homeownership wagon will eventually get you there.
Many home buyers have decided to jump off the fence and buy their very first house; perhaps it was the drop on interest rates to historical lows, or maybe the number of perceived bargains offered by the banks and a high inventory of homes for sale, or the $8,000 offered as a tax incentive from the government. When all these factors are put together, you will think its heaven and you will have the time of your life choosing the best possible home at the best possible price with an incredible low interest rate for the next 30 years... or is it?
This is not the true picture of what we are seeing today. It appears that the REO's or bank owned properties that flooded the market before and kept the inventory high due to their inability to dispose of those properties, have finally figure out how to sell them... by under pricing them! This strategy has been paying off for them very nicely. Buyers trying to outbid each other will push the price to the highest point the market can bear.
An underpriced REO home goes on the market and attracts a good number of home buyers who think that they finally found their dream home, or ideal investment. They quickly realize that they are not the only ones out looking at homes for sale. Here in the Boston area, we are seen 20+ offers presented on the same property within days.
How can a home buyer compete and win this bidding war? By understanding how offers are viewed by the seller and being prepared to meet those requirements as much as possible. If you can pay all cash, there will be no finance contingency or appraisals and it is possible for the property to close within days.
If thats not possible, follow these steps to strengthen your position and get your offer accepted:
1. Do a complete loan application and bring every piece of paper requested by the lender
2. Have the bank issue a complete pre-approval letter, signed by a real person
3. Offer to pay more than the asking price if you can
4. Put a large down payment if possible, this will help when your offer is compared to others
5. Be prepared to take the house on an "as-is" condition and spell that out in the contract
6. Reduce the inspection contingency from 17 to about 5-7 days only
7. Reduce the actual closing date to to as close to 30 days if possible
Realize that the sellers don't care who buys their house, all they look for is to get the maximum amount of money they can, in the quickest amount of time with the least amount of inconvenience. They don't want to do any work, or wait too long to sell the property or to pay for anything extra.
Now that you finally decided to jump off the fence and get into the housing market and become a homeowner, you need to give this idea some time and dedication, as we get closer to the end of the $8,000 tax credit window which is December 1, 2009, there will be far more competition and you will need all the help you can get. Work closely with your Realtor, don't go at it alone and be prepared to go see a house within minutes and possibly right an offer on the spot.
This market offers you a great opportunity to make the purchase of a lifetime... but others are also aware of these positive conditions and you will meet them when they compete with you... just when YOU think YOU found YOUR dream home. Happy House Hunting!"-Antonio & Alexia Cardenas " The Realtors In Motion of California
Labels: bank owned, buyers, first time home owners, REO/foreclosures, short sales
