Many foreclosed homes are already a wonderful bargain. These homes are generally sold for less than their market value because they have been repossessed and the lender is eager to recoup their money. However, even though these homes are priced to sell, you can save even more on foreclosed property by negotiating the price.
The first step in getting an amazing bargain is to find out about any possible repairs that need to be completed on the property. Get a professional inspection and assessment of the property. This is a great investment because it tells you how much you will need to invest in the foreclosure and it tells you how much you can negotiate the price. If the assessor and inspector find that some repairs will be necessary, you can use this as the basis of your negotiations with the lender.
Learn as much about the house and neighborhood as you can. Again, you are looking for anything you can use when negotiating with the lender. If a foreclosed home is in a neighborhood where homes are selling slowly, for example, this gives you an advantage when negotiating price. You can negotiate with the lender, knowing that he or she would rather have some money now rather than wait for the foreclosed home to sell in a slow market. Anything you can find that suggests that the foreclosed home might have a hard time finding other buyers can be a good argument with the lender to lower the price.
Before you start talking with a lender and trying to lower the price on a foreclosure house, understand how much competition there is for the house. Look at the investor groups in your area and attend a few foreclosure auctions. Are there many real estate investors in your area vying for properties, or are there only a few people tapping the foreclosure real estate market? If there are only a few competitors for a property, you may be able to make a lower offer.
Wait until the seller is even more motivated. If you are buying a real estate owned (REO) property from a lender, consider waiting until just before the lender has to submit performance information to investors. At this time, the lender will want to get rid of as many non-performing assets and foreclosures as possible to make investors happy. At this point, the lender may be more willing to listen to lower offers.
When buying a foreclosure home, also consider other ways you can save money. You don’t just save money on the purchase price of a foreclosure. Look around for the lowest mortgage rate possible – this will save you money over the term of your mortgage loan. Also, if you are purchasing an REO property, consider getting financing from the same lender you buy the property from. Often, you can negotiate for a better mortgage rate or a better asking price by getting your financing and your foreclosure from the same lender. Similarly, if you are buying an HUD home, call the HUD and ask about any special programs that you are eligible for. The Department of Housing and Urban Development (HUD) has many programs in place to make homeownership more affordable for Americans. You might just qualify for a program that helps you save even more money on your foreclosure home.
Joseph Smith has been educating buyers on the finer points of Foreclosure at BankForeclosuresSale .com for over five years.
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