Tuesday, January 25, 2011

Foreclosure Buying Tips

Dick Barr of Goldtree Realty is a licensed Broker and has been an REO/Foreclosure specialist  in the Chicagoland area since 2004. In addition to specializing in foreclosures throughout the Chicagoland area, Dick has also purchased for investor clients properties all over the midwest, in cities such as Milwaukee, WI; South Bend, IN; Cincinnati, OH; Indianapolis, IN; Memphis, TN; Kansas City, MO and others.  Dick says the following tips apply to virtually all markets in the U.S. and that while many buyers have heard that there are many foreclosures on the market, most don't understand these practical rules they can follow to get the right property at the right price.

Here are some tips to consider:

1. Work with an agent who has access to foreclosure information.
Many home buyers assume that all agents have access to foreclosure listings. While most agents do have access to the information, a regular, retail agent may not know the players, the processes, the tricks to get your offer accepted by the banks.

2. Bank-owned properties generally close faster than short sales.
While short sales can be bargains, they also can take a lot longer. Some banks will negotiate in a timely manner on short sales, but most will prioritize properties they have already repossessed. It is not uncommon for a short sale to take anywhere from 3 months to 2 years to get approval from a bank.  At which time a buyer's circumstances most definitely could have changed drastically from the time they initially placed their offer on the house. 

3. Don't automatically assume you can offer less than full asking price.
This tip varies from market to market, however in the hot foreclosure markets, such as Chicago, banks price their properties to attract the most attention.  They want to initiate a bidding war.  Many foreclosure properties are priced below market value with the hopes that a large amount of buyers will throw up offers, leading to, in most cases, a selling price way above asking price.

4. Do not count on the fact that the bank will counter your offer.
Almost all foreclosures that are priced right turn into "Multiple Offer" situations.  When this happens, the banks do not make counter offers, they simply ask for your highest and best offers.  By not offering a price worthy of a banks immediate acceptance, you allow more time to pass, giving opportunity to other buyers to compete with you.  Low balling a bank could end up costing you thousands of dollars.

5. Get pre-approved from the right bank.
When making an offer on any property, it's strategically helpful to be pre-approved by the right bank. Banks, such as Fannie Mae (FNMA) offer their own financing for home owners and investors.  Often, offers that include an opportunity for them to finance the deal can be more attractive than an outside bank loan or approval.  During negotiations, this may tip the scales in your favor.

If you would like more information about the foreclosure buying process, you may contact Dick at his office in Skokie, IL at 847-674-4445.  You can also visit him on the web at www.ForecloseChicago.com, or you can email him at DickBarr@ForecloseChicago.com.  Dick has a team of agents who are ready, willing and able to help you with your home buying or real estate investment needs.

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