Thinking of Buying a Utah Foreclosure? Timing is Everything

If you are thinking about capitalizing on recent foreclosure activity, then timing may be the key to your success. Foreclosure activity in Utah is up 96% from a year ago and we are currently ranked 6th in the nation in per capita foreclosure activity. So how does timing play into buying a foreclosure? For bank owned homes (REOs), it is all about speed. On the other hand, short sales are all about patience.


First, lets talk about REOs. When a bank gets ready to put a home on the market, they typically get two opinions on the value of the property from local real estate agents. They take those values, reconcile them, and come up with a list price. The bank wants to be as competitive as they can without giving the home away. Because it is not an exact science, sometimes their values are high and sometimes they are low. They key is being ready to buy when a home comes on the market priced to sell.

The best way to do this, is to have your real estate agent set you up with an automatic email to alert you anytime an REO comes on the market in your chosen neighborhood. This way, you will can track prices and be ready to write an offer when the right property comes on the market. Keep in mind that banks want to sell their properties quickly and without trouble. They are looking for buyers most likely to make it to the closing table. You can enhance your offer by putting as much cash down as possible, having a strong pre-approval letter ready, and being ready to close quickly. With this strategy, you will be among the savvy buyers picking up the best priced REOs.

With short sales, the strategy is a little different. Here, you have to have the patience to work on the bank's time. Remember the bank has not foreclosed on the property yet so they are not in a big hurry to take a loss. They are going to review your offer with the buyer's package when it is convenient for them. If you have the flexibility to close when it is convenient for the bank, it will make your offer more attractive. Approval from the bank can be as quick as a few weeks or can take over a year. 3-6 months is not uncommon. You should ask your agent some questions to get a sense of how long it is going to take. For example, has the buyer submitted their hardship letter and package yet or are they waiting for offers? Have any other offers been submitted to the bank? And, has the bank approved the list price yet?

These questions will help you narrow down properties that are priced right and likely to close fairly quickly. Buying a foreclosed property can be a challenge, but the savings can be huge. With the right timing, you will be much closer to winning when buying a foreclosed house.


Source: Realtytrac