You Can’t Beat the Competition with Low-ball Offers
Gone is the day when a buyer can find multiple homes of choice to bid on. It used to be a game to some! Finding a bank-owned home for sale these days is hard enough. Actually buying one is an even bigger problem. Last year the supply of bargain-basement foreclosed homes shrank, as banks temporarily stopped trying to repossess properties to review possible paperwork errors. But 2012 is proving to be a different story. Lenders are starting to resume foreclosure filings, so more of these distressed homes are expected to be listed for sale.
How can you find these homes and make their offers stand out from the competition?
1.) Locate foreclosures by using a good agent who can direct you to bank-owned or short sale homes, if that’s what you’re looking for.
2.) Government-run mortgage companies Fannie Mae and Freddie Mac market foreclosures nationwide on HomePath.com and HomeSteps.com.
- In addition, Fannie and Freddie have a program called First Look that gives first-time home buyers (and others who need financing) a head start on investors in the search for bank-owned homes. Under this program, buyers who intend to occupy the home as their primary residence can submit offers during a 15-day window without competition from investors. After the 15 days, investor offers will be considered with all other bids.
3.) Start with your best offer. If you take away only one thing from this blog, let number three be your golden nugget! This isn’t 2007 or 2008, when sales were sluggish and sellers were thrilled with any offer. Demand creates bidding wars. For the first time in years, I am now seeing sellers just flat out reject offers without even countering. A low-ball offer is roughly 25% below asking price. Current inventory is now selling on average 97% of list price!
4.) Pay up: Consider making a hefty EMD (Earnest Money Deposit). Upon making an offer, a typical buyer puts down $1,000 to convey interest. Buyers who want to impress the seller may want to offer substantially more. But that strategy isn’t for the faint of heart. If a buyer has to back out of the deal for a reason not allowed in the contract, the deposit is at risk. You agent can explain all potential risks associated with this.
5.) Be accommodating: Volunteer to close quickly! And when submitting offers, buyers should turn in all the requested paperwork. If a bidder forgets to include a “proof of funds”/pre-approval letter, or other documents, some sellers may just move on to a more “complete” offer.
I hope this has helped educate you more on the buying process in today’s market. If you have any questions or comments, don’t hesitate to contact me.
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Posted on April 26, 2012, in Real Estate and tagged Bid, Buy a Home, Earnest Money Deposit, Fannie Mae, Foreclosure, Freddie Mac, Kristen Pell, Low-ball offer, Offer, Pre Approval, Pre Qualification, Real Estate Biz, SWFL Real Estate. Bookmark the permalink. 1 Comment.