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How To Buy Homes From Banks...
By Mark Walters
Apr 30, 2005, 14:03
How To Buy Homes From Banks...
How the market place changes and what to do about it. This is assuming our efforts are being spent trying to locate motivated sellers.
Check the foreclosure rate in your area. Is it going up or down? Check to see if your population is going up or down. If it's going up, see how the increase compares to prior year's increases. Is the incoming population slowing or accelerating.
When foreclosures are down, prices usually are going up. In this case you need to go after sellers before they sign a contract with a Realtor.
You can do this by purchasing lists of recent foreclosure notices, check your legal newspaper for those same notices, advertise in the paper saying you can purchase houses fast, etc.
When foreclosures are up, prices are often going down (but not always). You can still use the above mentioned efforts. In addition you can contact realtors who are regularly advertising foreclosures for sale.
Realtors are paid by commission. Usually the commission is in the neighborhood of 6%. If a Realtor lists a property for sale with the seller and another Realtor represents the person who buys the property, they must split that 6% commission. Often times a Realtor will have a relationship with a lender and exclusively offer the lenders foreclosed properties.
Contact the Realtors who are advertising the foreclosure properties. Let them know you want these properties and if they contact you before they advertise them, they won't have to split their commission.
Here's some insight into lender owned properties. When a lender forecloses on a property they often end up owning it. Lenders are in the business of lending money, not owning properties.
They don't want to own properties because it's looks bad on their books. It's a deal that went bad.
When they list the property with a Realtor a price must be established. This price is known as a B.P.O., Broker Price Opinion. This price is usually high. When you present your offer, you want a price that's lower.
The way to establish your lower price is to list in your offer everything that needs to be fixed up. Be detailed in your estimate of these costs. Lists closing and holding costs as well.
Let the lender know the average time it takes to sell a comparable house in that area and what that will cost you. List advertising costs, Realtor costs etc. If the house looks bad, take the worst looking pictures you can and add that to the contract.
Don't put contingencies in the offer. Check these things before making the offer and work them into the list of problems if applicable. Offer all cash and a quick 10-day close if possible. The point is the sooner the lender gets paid and the house is off their books the better.
The lender usually doesn't have a problem discounting the property if you do these things. After all that, lower the price you offer even more. The lender can always counter your offer but many times they will just accept it to get rid of the property.
Conversely, let's say the asking price is reasonable enough to still make a good profit. Obviously other investors will be interest in this scenario. Make your offer $1,000 higher than the lenders asking price to get your contract accepted.
Learn how to get banks to discount loans big time...
http://buyincomeproperties.com/ShortSales.htm
About The Author - Mark Walters has written
"Single Family Homes - The No Risk Investment".
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