Buying Foreclosures Northwest Arkansas

Tips for Buying Foreclosures

1) Get the Property History

Ask your agent to find out the last sale price of the property. Look at the last mortgage on the property to see what the bank foreclosed on. This amount will not tell you what the bank will accept, but it is a great place to start.

2) Determine Comparable Sales

In many cases, the list price has little bearing on the value of the home. The market value carries the most weight. If you are up against competing offers, other buyers will offer more than list price. There are simply tools that a good agent can offer you to determine a reasonable value. This is more important than ever as the market is now being "driven" by foreclosed properties.

3) Analyze Listing Agent's REO Solds

Most REO (Real Estate Owned - another term for foreclosed properties) agents work for one or two banks. Some listing agents are exclusive listing agents for REOs, and they do not list any other type of property.
- Ask your buyer's agent to look up the listing agent in MLS
- Run a search using that listing agent's name to find the last three to six months of that agent's listings.
-Pull the history of those listings to determine the list-price to sales-price ratio. If most of those listings are selling for, say, 5% over list price, then you may need to offer 6% over list price, and vice versa.

4) Ask About Number of Offers

If there are no offers on the REO home, you can probably offer less than list price and get your offer accepted. However if there are several offers, then you will need to make a "best and last offer". This offer represents the most you would be willing to pay for the home.

5) Submit Preapproval Letter

All lenders will require you to be Pre-Approved before you submit an offer. The "trick" is to have a pre-approval for the exact amount of your offer. Never more!!

6) Don't Ask for Repairs / Inspections

Sometimes banks will pay for repairs, but typically will not agree to do so at the offer stage. If there are problems found during a home inspection renegotiate after your offer has been accepted.

7) Shorten the Inspection Period

Be ready to do your inspections and be ready to act. The banks do not want to maintain their inventory an longer then necessary. Remember they are in the lending business not the Real Estate business.

8) Understand the fees

Some banks will pay fees for you, some will not. Most lenders will cover your title insurance and other title fees because they had to pay those any way. Most lenders will not pay for home warranties or termite policies.

9) Be Patient
This is the number one rule in dealing with Banks. Each house is simply another asset to the bank. To you it may become your home, but it is not a home to them.


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