Bank Owned Properties

Some tips for buying foreclosures

There are a lot of great deals on the market, but buyers need to do their due diligence

Lenders are slowly unloading their foreclosed properties which provides both opportunities and stumbling blocks for bargain hunters.

Just because the price is low doesn't mean you should make a snap decisions to buy something that isn't right. The best advise I can give you, which may sound a little biased, is get a good Real Estate Broker. There are a reason some of these homes have been foreclosed and it is a not a pretty picture.

1. Don't get caught up in the frenzy

This is how the last bubble burst, everyone and I do mean everyone thought they could make money on the flip. Banks put repossessed properties back on the market at lower prices, but not necessarily the price the property is worth. True they do want a quick sale to avoid the expenses of upkeep - taxes, insurance, heat and electricity, but they are not usually giving the place away, unless it has other issues.

It is all about knowing what a home should be priced at, not what it was priced at (but did not sell) or what it sold for several years ago. If it is a good value, other serious buyers will also be looking, so you need to work quickly and understand the neighborhood. Employ a Realtor that can help you position your offer to win. Once the bank puts a property on the market, it is usually priced to sell.

Employ the three C’s: calculate what you want to spend and do not exceed that price, collect lots of data so you are prepared for the right opportunity and construct a plan for making a winning offer. With lenders there may not be a second chance.

2. Get your financing in place

Many lenders ask you to pre-approve through their bank, this can be a little daunting if you start making a lot of offers. Often they will offer incentives to do business with them, so this is in your best interest.

I suggest my buyers start with a pre-approval from the larger REO banks and then if we need to make a change we can, but it only makes sense if they have more properties that the odds will work in your favor.

3. Consider fix-ups

Most bank owned properties are sold as is. Know the condition of the house before you buy. The good news in Oregon the contract allows you to at least perform an inspection, so you know what you are getting.

In 25% of cases, homebuyers persuade lenders to fix some of the problems before the sale closes. Most of the time, banks would rather sell the house to the next available bidder -- one who doesn't ask the bank to pay for repairs.

You will need to be willing to consider a home that needs some attention to deferred maintenance from the previous owner.