A guide to negotiating the best offer on a foreclosure or pre foreclosure

675 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
675
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
15
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

A guide to negotiating the best offer on a foreclosure or pre foreclosure

  1. 1. | Foreclosure DataBank | A Guide to Negotiating the Best Offer on a Foreclosure or Pre-Foreclosure Contents Introduction……………………… 1 Pre-Foreclosure................... 2 Public Auction………………….. 3 REO…………………………………… 4 Contact Info………………………. 5 Just because you’re not an expert doesn’t mean you should be too intimidated about making an offer on a foreclosure. You don’t have to start with offering more than you ideally want to pay because you think your offer will be too low. If you’ve researched similar foreclosed houses and adjusted your offer for any liens or repairs needed on the home, your offer should be fair. Remember that your negotiation dealings will vary depending on which stage of the foreclosure process the property is in. You’ll either be making an offer to the homeowner, a third party seller, trustee or the lender who financed the home. This guide will take you through the process of negotiating offers during the pre-foreclosure, public auction and REO stages of foreclosure. [Volume 1, Issue 1]
  2. 2. Pre-Foreclosure 2 The homeowner may arrange with the lender to sell the home as a short sale to pay back their default and avoid a foreclosure. You’ll be dealing mostly with the homeowner in this stage, but any offers you make must be approved by the lender. If a trustee or attorney is involved, you’ll have to contact them as well. To start the process of negotiating an offer on a short sale:  Contact the trustee or attorney: The homeowner may have months after the Notice Of Default (NOD) or Lis Pendens (LIS) is issued to pay back their default or sell their home in a short sale. The trustee or attorney will be able to tell you if the property is still facing foreclosure. There’s no use wasting time trying to make an offer on a home that is no longer available.  Contact the homeowner: If the homeowner has not already listed their home as a short sale, you may want to send them a postcard expressing your interest in the property. Remember to be sensitive to the homeowner’s situation; try to avoid mentioning foreclosure in the postcard. You may want to hire a real estate agent if you’d prefer to contact the owner more directly.  Negotiate your price: If the homeowner is interested in selling their home to you as a short sale, it’s time to negotiate payment. Obtain a title search and hire a contractor and/or appraiser to look over the home if you can. If the homeowner cannot afford to pay off liens on the home or make any repairs before the sale, subtract these costs from your offer.  Offer to help the seller: There has likely been some difficulties and hardships that led to the homeowner defaulting on their loan. The homeowner may be more receptive if you can let them continue living in the home as a renter for the first couple of months after the sale. You can also offer to pay housing costs for the first couple of months after the owner finds a new home.
  3. 3. Public Auction 2 At this stage in the foreclosure process, the trustee has been authorized by a judge or the lender to issue a notice of sale and allow the home to sell at auction. Foreclosure auctions happen quickly and can be overwhelming if you are not prepared. To get the best bargain on a foreclosed home:  Witness the auction process: You may want to attend some foreclosure auctions as a spectator to get an idea of what they can be like. Be sure to especially take note of similar foreclosures and what people are bidding for them. This can help you form an idea of how much you should offer.  Contact the seller named in the listing: The homeowner may have up to five business days before the foreclosure sale to pay off their default. Foreclosure auctions can also be postponed or terminated in short notice. You’ll need to speak to the attorney or trustee to find out if the listing is still current. Ask as much as you can about the property during this time.  Research the property: Ideally you’ll want to run a title search to find any liens or debts on the property and hire professionals to give you their estimate. However, because foreclosure auctions can be very fast-paced, you may not have time to do this before the sale. Find out as much as you can about the property and keep it in mind when making your bid.  Have your maximum bid pre-set: It’s easy to get caught up in fast-paced auctions and make bids for more than you want on home foreclosures. Use your comparative figures from similar foreclosure properties, other foreclosure auctions, and repair and debt estimates. If someone outbids your maximum offer, don’t outbid them in your frustration. You’ll know it’s not worth it.
  4. 4. At this stage, the foreclosed property has likely already been through a public auction where it failed to sell. A short sale is no longer possible at this stage as the home is now in ownership of the lender who financed the defaulted loan. If the lender is a large bank with a dedicated REO department, they may sell the property themselves. To make an offer on an REO: 4  Contact the lender: If you don’t have access to the REO listing, you can find out the name and address of the bank in ownership of the property through the local property accessor. You may have to make a direct request to the bank to be able to see their REO listings.  Hire a real estate agent: While this is not absolutely necessary, banks and lenders are less willing to cooperate with inexperienced buyers. Even if this is not the first time you’ve purchased a foreclosed home, having a real estate agent represent you can increase your chances.  Inspect the home: As with the pre-foreclosure and public auction stages in the foreclosure process, you’ll want to know the title condition and have the property professionally appraised. You’ll want to take the cost of any debts or repairs into consideration when making your offer and subtract them from the total.  Make your offer: Making an offer on an REO is similar to making an offer on a short sale. The difference is the homeowner isn’t involved. It’s easy to think that getting a good deal is impossible without a stressed and desperate homeowner hoping to be cut a break. However banks make no money form having homes in their possession, so they want to unload them quickly. REO
  5. 5. 5 Foreclosure DataBank 1602 Alton Road #432 Miami Beach, FL 33139 1-888-596-9279 ForeclosureDataBank.com@gmail.com The biggest foreclosures database on the web Find us on the Web: www.ForeclosureDataBank.com Remember that research is the most important factor to getting a good bargain on a foreclosed property. Since sales can happen quickly it may not always be possible to obtain all the information you want, but you should at least research prices from similar sales. If you can’t run a title search or have the property inspected, set aside funds for potential debts and repairs. For more helpful guides on buying and investing in home foreclosures, go to our blog for the latest articles on foreclosures http://bit.ly/bdatabankblog.

×