Buying a Foreclosure: Some Negotiating Tips
Knowing how to submit a solid offer to begin with has everything to do with your success. I put together the following video in my series on ‘Buying a foreclosure’ on YouTube below to help buyers navigate through this process.
Some of the facts one needs to realize in buying a foreclosure is that the seller, which is the bank or mortgage company, has conducted an evaluation on the property. They have hired a variety of local Realtors and appraisers to give them professional opinions on what it is worth on the market. They know the fair market value, and they know the distressed market value. Usually they list a property for sale at a distressed value or close to this when they launch it onto the market place.
So, unless their market information was flawed, they are usually attempting to sell it at a low value for the surrounding neighborhood. Knowing a few things about the negotiating process, including factoring in how long it has been on the market, condition, and location can help you gain a better understanding on how to be successful in buying the home.
Almost all banks and mortgage companies sell their properties through an intermediary service company, often called an asset management company. They have an exact procedure to follow on submitted offers, and as long as you follow that procedure they will review your offer.
Going in too low on a recently listed property can often result in a rejected offer, or a counter offer back at full list price. Going in low on a property that has been listed for over 90 days with no other offers can result in an entirely different response, for example, and can often get accepted or countered with a reasonable response.
So there is a balance to learn on this and I have included a video I created on this below. I hope it helps.