8 Tricks to Getting Your Offer Accepted on that Foreclosed Property
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Making offers on foreclosed properties can sometimes be a daunting task even for seasoned real estate agents and investors. Each bank can required different and very specific requirements that must be submitted before they even look at your offer. Recently, we have been seeing multiple offers on these homes and above asking price offers on many REO (bank owned) properties. Here are some tips and tricks that we have learned to get our offers accepted:
- Pay cash-REO banks love cash buyers. Although this may appear impossible for you to do, see if can move some equity or money around to make it happen. Alternatively, see if your bank will give you a line of credit against another property so you can write a check for the purchase of this new property.
- Offer to close in 2 weeks-This requires either a cash offer or a very organized mortgage broker to make this happen. Truthfully, I often find that it is the REO bank that can not close that quickly because the title work on a foreclosed home can be difficult.
- Remove the inspection contingency-Only do this if you are confident about your analysis prior to making your offer. Alternatively, many banks will give you a verbal acceptance one day and then require you submit your earnest money check and their bank docs within 48 hours. You can use that window to do your property inspection and then not turn the docs in if you need to cancel. Although this not the most professional way to handle yourself, it could prevent you from buying a problem that you did not see when you did your walk-thru.
- Make sure to use a reputable investment real estate agent-Surprisingly, the number of REO agents in Minnesota is actually quite small. Although they don’t have much if any influence over the bank’s decision, they may be willing to give you useful advice that may help you win an acceptable offer. I found that I had to earn the respect of the big REO agents before they would talk to me.
- Do not ask for seller paid closing costs-Banks just look at the net offer. To them a $100k offer with $5k in closing costs is the same as $95k offer with $0 closing costs. In fact, they feel that paying closing costs can just complicate the transaction.
- Do not ask for the bank to perform any repairs-They will almost never pay for any repairs or changes to the property. They are selling it as-is. Just factor that work into your offer price.
- Do not put any time limitations on when you need a response from the bank. The banks are on their own time table. They will do what they want to do, when they want to do it.
- Refrain from any other non-standard language or requests on the purchase agreement which may include: assigns to, access prior to closing, repairs, etc.
Although this is not an exhaustive list of foreclosure buying tips, just using the main ones will help you win more offers. Gosh, on second thought, maybe you will be competing with me and I shouldn’t have told you my secrets! I guess in this market, sadly, there are enough foreclosed properties to go around!
Are you searching for investment properties on your own and frustrated at your results?
Scott Ficek is a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors buy and own Minnesota Investment Property. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or use it to search the MLS for Investment Properties.
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Scott, we have noticed that a lot of the foreclosures that meet my client’s criteria are dwindling from the market or are priced higher than even six months ago. The market is heating up–at least in North Minneapolis. We have to be quick on the draw, but not too loosy goosy with our offers. It’s getting more competitive out there. That’s a good thing!
> Do not ask for seller paid closing costs-Banks just look at the net offer.
Don’t all sellers look at the net? I laugh when I hear people playing with terms like they are really going to fool the buyer.
Ned Carey ยป
Yes, most seller’s should, but I think private sellers get “offended” when the buyer asks for closing costs. I have found they almost see it as insulting. Dumb but true.
Another highly effective method we have found is putting in backup offers. It seems more often than not these days an “accepted offer” doesn’t really mean squat because so many people cannot pull off the financing. Putting in a low backup offer is a great tool. When the primary offer falls through the bank has already sat on the property longer than they want and they very often accept the backup offer in whatever form it may be, provided it’s a strong buyer.
It seems now we are in a market of more buyers than inventory. I can’t remember the last time I wasn’t in a multiple offer situation. It seems to me that CASH buyers are winning the bidding war.