This is a bit of a re-blog. I thought it was appropriate since the number of foreclosures has skyrocketed since I wrote my January post called "About Foreclosures and Sainthood". It was a very popular post. I received 55 comments here but more importantly it was picked up by US News and World Report. That led to a number of emails from agents asking permission to reprint my post and an increase in blog traffic at my real blog over at the Eastern CT Real Estate Blog where I posted it.
Although I've handled a few more foreclosure sales since January, I am still not a foreclosure expert and I continue to learn a few things about foreclosures. Some of the things that I do know, I learned the hard way. Anticipating that foreclosure inventory won't be dropping anytime soon, I thought I'd tweak and share my tips for buyers again. If you memorize these tips, your foreclosure adventure (and it can be an adventure) might go a little easier. Agents, while it might sound like I'm being a wee bit flip, I'm really trying to help make your life easier and help your buyer get a good deal. (See #3)
Ok, pay attention now.
1. Complete all the bank requirements before submitting an offer. If the bank requires you to sign and initial 41 pages of documents, don't debate the subject unless you really don't want to buy the house. That is why they are called requirements.
2. Your attorney will hate the required bank addendum and try to change it. (See #1)
3. Don't assume a bank foreclosure is a great deal. In my experience, great deals are hard to find and most foreclosures are listed at fair market value. If you are willing to do repairs, you may find a good (maybe even great) deal on a house that needs work.
4. Although the price on a bank foreclosure may drop eventually, banks usually don't accept a "low ball" offer. In some cases there is even a secret formula of how much lower than the list price an asset manager can accept. Once the price is dropped, the formula is reapplied.
5. Closing dates can't be mushy. Time is of the Essence. Bank sellers expect you to close on or before the closing date of the contract. They don't accept excuses and will often charge a per diem if you are not ready when they are.
6. Keep your offer clean. Banks won't accept a contract littered with contingencies. AND if you have a house to sell, don't bother making an offer until your house is sold. Don't waste your time.
7. Be willing to Close quickly. I swear asset managers have little contests for most closings in a month. They always want to close THIS MONTH. They get really testy if they lose the contest and don't win the toaster.
8. Asset managers are dealing with hundreds of properties. Don't expect an answer from the bank within 24 hours even if your offer requires that. Better yet, don't make your offer require that.
9. Some banks work faster than others. If the bank, like Countrywide, uses the REOTRANS portal, things may go quicker. I've been getting responses to offers within 24 hours.
9. Don't get mad at the listing agent if you don't get a response quickly. (See #8) You WILL need the patience of a Saint but it really isn't the listing agents fault. Calling her 5 times a day to ask, "Have you heard anything yet?", won't get you an answer any faster.
10. While your offer is being considered, other offers may come in. This will make you really mad. (See #9) And to add insult to injury, you will have to sign another paper saying you understand you are in a multiple offer situation so come in with your highest and best offer.
11. "As is" usually means "as is".
12. Prayers can't hurt.
12 1/2. Agents who list bank foreclosures are automatically eligible for Sainthood. OK, I just threw that one in for other agents but bank foreclosures are a lot of work. There is tons of paperwork and reporting. Good systems will make the job easier. Unless you are working with banks who have their own list of contractors, be prepared with a list of good, reliable vendors you can count on. And expect to be yelled at a lot. (See #9 and #10)