How to Win the Bid on Foreclosures
To win a bid on a foreclosure, you must be quick and competitive. The foreclosure market can be a fast-moving market because many home buyers are competing with real estate investors for the best deal on a home. Foreclosures are typically priced below market value, making them affordable for many home buyers. If you have found a foreclosure home you would like to put a bid in on, it is important to do your research, act quickly and utilize the help of a professional real estate broker or agent in the process.
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Instructions
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To win the bid on a foreclosure, do your research. One of the pitfalls of a foreclosure is that they do not come with any disclosures. Simply put, you are buying the home "as is." Since the home is owned by a bank, it is impossible for them to disclose any information on the home. The banks use outside companies, vendors and contractors to help them sell the home, therefore, they never actually visit the home themselves.
Be sure you inspect all areas of the home thoroughly so you are aware of any repairs needed and problems with the home. Obtain estimates if necessary. Even though the home may be well below market value, it may not be a good deal if the amount of repairs needed exceeds your savings.
Research the price of homes in the area. If you are utilizing a real estate agent or broker, they can help by performing a competitive market analysis (CMA). This will help you determine how much the home is worth. With good data, you can make a good offer. Going in too low will not help you win the bid on any foreclosures.
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To win the bid on a foreclosure, you must act quickly. The moment you are aware the home is on the market, it is imperative to visit it immediately if possible, put together your research and submit your offer. This is where a licensed real estate professional will come in handy. They are trained in submitting offers and experienced in working with lenders and banks. A real estate agent will get your offer submitted timely, and will stay on top of it. They do not get paid until a sale is made, so it is in their best interest to do so.
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Be competitive when making an offer. Simply put, be thorough. Create an offer based on your research, and give yourself some negotiating room. If your real estate agent is aware of other offers, go in with your best and final offer right of the bat.
It is best to have as few contingencies as possible. Making your offer contingent on home inspections or financing can deter banks. Have this done before submitting your offer.
Follow the instructions from the bank. Most will require a minimum amount of earnest money put down. Make sure you do so. Failure to follow their guidelines will not help you in winning the bid.
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Tips & Warnings
Utilize a professional to help you when submitting an offer on a foreclosure. Real estate agents have more experience in dealing with banks and lenders.
References
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