Bitten by the foreclosure shopping bug? If you are like many, you’re curious about how to buy a foreclosure. Many of our clients won’t even consider a property if it is not a foreclosure. With visions of bank giveaways dancing in their heads, they don’t know the first thing about what it takes to buy a foreclosure property. I’m here so you don’t end up with big red welts. Here are the top 5 things to expect when you are expecting to buy a foreclosure:
- The first rule of foreclosures is the bank has the all the power. They have the ball and if you don’t play by their rules, then they will take their ball and go home. It’s infuriating and frustrating at the same time...infrustriating. It’s so bad that I had to make up that word. The thing is there is no use getting worked up about it. Know it’s going to happen and just roll with the punches.
- The Bank will not respond to your offer time limits. Leave your hardball talk at the front door. The bank will not speed up or slow down for you. They will respond whenever they are ready. It doesn’t matter how “good” your offer is.
- You have to have a pre-approval letter or Proof of Funds. Listen, your mom knows you’re good for it, I know you are good for it, but the bank...they need convincing. In fact, they won’t even review your offer without one attached to the offer. You might even need to call “their” loan officer to get a pre-qualification letter. You’ll be under no obligation to use them, but they want to know that you’ve got the financial backing to buy the house.
- It’s sold as-is, where-is. This is not going to change, but it is still important to have an inspection done. If you don’t, you could be signing yourself up for a life in the money pit.
- Cash is not king. It’s certainly not a court jester, but it’s more like a duke. It’ll help you when you are up against other offers, but don’t expect to see a premium price simply because your offer is cash. Banks are not rewarding all cash buyers will significant price concessions in this market. In fact, you might be going up against other cash offers. Recent reports show 30% of all transactions in today’s market are all-cash transactions.