There are bargains to be had in today’s depressed housing market. When buying a lender-owned property, though, you need to be especially savvy to come up with an offer that will satisfy the beneficiary bank or agency. First, be aware that lenders are anxious to sell what is now a nonperforming asset. They also don’t want to lose much on the deal. That means you’ll have to submit a particularly well-thought-out offer on a real-estate-owned home. Following are strategies to consider:
- Ask your buyers’ agent to find out the bank’s purchase price for the property. Offer an amount that is between the balance owed on the mortgage and the sale price.
- A little research goes a long way. Your agent can look at sales of similar properties in the neighborhood over the past few months as a way of assessing the value of the property.
- Consider the competition. Other potential buyers of your property will likely base their offers on active listings. Stay current with prices of advertised homes in the same neighborhood, add a few extra dollars and beat out your competitors.
- Get preapproved by your lender of choice, but also get a preapproval letter from the lender’s own company. This is a simple way to establish your credentials. A bank will be less inclined to trust a competitor’s approval than one from its own mortgage department.
- Be prepared to do fix-ups yourself. Even if a real-estate-owned home is not sold “as is,” don’t ask the lender to make repairs in the initial offer. It likely will send your offer to the bottom of the pile.
Even if it is your dream home, don’t get emotional. View your offer on a “bargain” home as a transaction. Save the self-congratulations for closing.