So you want to buy a foreclosure ehhhh?
Are you one of those savy people sitting around knowing that there are deals to be had right now in the Real Estate Market? Good you are right! Do you think that you are going to go in there and offer 50 cents on the dollar to a bank and they are going to take it with a smile and hold your hand and kiss you during the transaction? Whoops... You are wrong! They don't care. I am sooo sorry to be the one to tell you that but at least you now know. They are old hats, sort of, at all this now and they don't really like to be lowballed. Actually no one does. Can you get a screaming deal any way? Of course. You have to be patient though and play the game. Also, understanding the process helps. If you step for a minute into the shoes of the asset manager you will get a clearer idea of what is really going on.
First, close your eyes and imagine that you are in an office cubicle piled with inumerable files. Then, your phone is ringing continually. You reach down and open one of those files and see photos and paperwork on a kinda cute little house 1000 miles from where you sit. Hmmmm you have to decide how much you want to get for this house. It looks like it is your job to keep your companies losses down to a minimum. Some crazy agent is on the phone now telling you that you can only sell this house for HALF OF THE PREVIOUS LOAN VALUE! What!! How could that be? They showed you the comps and you finally agree. It had to be mortgage fraud. None of the comps were ever that high. Well, some time goes by and after the property has been broken into and the pipes and ac units have been stolen. Some people keep living in it and making a mess so you have to pay people to clean it up and secure it over and over. So finally you drop the price because it really has to go. Then the first offer rolls in and it is ...... half of the now reduced 50% of the original loan. YIKES! So you decide to show them what you are made of and you counter 2 weeks later by coming down $500 from where it was listed at the time. Ha Ha Ha!
Ok get the hint? Yes? They don't have any first hand knowledge about the property. Any of them. It is a totally different transaction than you will ever experience. You have to find out the rules and go with it. Most of the time you can get them to negotiate a little but, if you want to get the price down a lot you will just need to wait for it to drop. And that does happen, but it happens when it happens and you need to be ready. You put in the offer that day and make it good. The banks now have learned how to get investor buyers into a frenzy when they want to. They drop the price until they get multiple offers and then play them against each other. I have had 3 buyers in multiple offer situations this week! It is as if we have two totally opposite markets running simutaniously. One where the normal managed homes are sitting like stink bugs and the stinky foreclosures are selling like crazy.
Just thought a bit of insight might help. It is a great time to buy and the perfect time to begin your wealth building portfolio of Real Estate. A little diligence and hard work can have you sitting pretty in just a few years. The rental market is tightening up and, as a matter of fact, construction went up for the month of May! All due to the startup of apartment buildings. So there are others watching those statistics too!
Michelle Hollberg