Buyers Considering a Foreclosure Purchase?

The way it used to be: Meet a new buyer client and when I asked them what they wanted in a home, they would say something like, "3 bedrooms, 2 baths, and a 2 car garage". Things have assuredly changed. Most times these days my homebuyers say something like, "I want to buy a foreclosure." These comments mean I need go the extra mile to determine the reasoning - and help them thru the process with as little aggravation as possible.

The New Client ~ when a new client recently insisted that he absolutely only wanted to see bank-owned homes because he didn't want to pay what the current market was demanding in ‘standard sales' I was anxious to expand his sphere of properties by dealing directly into this issue. While discussing the desire to buy a foreclosure or bank owned property, it was readily determined my buyer wanted the best bang for this money.

We should all note that primarily there is nothing intrinsic about a foreclosure that means that it's a great deal or otherwise more desirable than a standard sale. Banks are just as likely to price their properties unrealistically as individual sellers, and individuals can be easier to negotiate with. Some of the homes on the market in his price range are bank-owned homes, so we do need to be prepared for what those transactions will look like and for you to be well qualified and ‘show' well to a bank-seller.

The Getting Started Phase ~ I started briefing my client on what to expect if he went the foreclosure route, which about 50 percent of my current clients do, looking for that great deal. I informed him not be outraged if he encountered multiple offers, long delays in responses from the bank, and a somewhat sketchy escrow due to the fact the bank insisted on using their own escrow company, rather than one as a local I am familiar with. His thoughts are that the banks can't wait to unload these ‘toxic assets'.

Next Step ~ A most important aspect of buying a home from the bank is to immediately understand that this is not a logical individual you are dealing with. This is an institution and each decision runs through an inefficient administration and involves people whose motivations are not as logical or obvious as with an individual seller.

So consider that there are five houses for sale in one neighborhood - three are bank owned and two are private sellers. Due to the fact the bank owned homes are in the same area and for sale, the private sellers are going to price their properties accordingly. When the time comes for potential repairs to be done and requests the repairs, do you really expect the bank to do as much as the private seller?

And in order to keep things clear, out in the open, we again discussed the potential to purchase a bank owned or a private sale property. After my coaching and his new understanding, the market became much more attractive to my buyers as he now would consider ALL homes for sale ~ not just foreclosures/bank owned properties.