When it is Time to Negotiate on a Foreclosure
When it is time to negotiate on a foreclosure, there is no better advice that making sure you present a complete offer to that the seller will consider it. The seller in a foreclosure is the Bank, Mortgage Company and sometimes a Credit Union that seized possession of the property back from the prior owners when they defaulted on their loan.
A typical complete offer when bidding on a foreclosure includes a purchase contract, any required bank addendums, proof of funds (as in a cash offer) or proof of financing (as in a financed offer) and proof of an earnest deposit. When you have decided to place an offer, you may also want to know how long the property has been on the market and whether or not there is any other interest on the property from other buyers. For more information on this, check out this article I wrote on the subject.
This is where working with a Realtor can be very helpful, especially one that is representing you as a buyer. When a foreclosure has only been on the market a few days, it has been my experience that the seller usually is very reluctant to consider an extremely low offer.
As an example, let’s assume this foreclosure came on the market just a few days ago and the list price is $50,000. If you go in with a low offer of $25,000 you are likely to get an outright rejection or a counter offer that is the same as the listing price. So you have to take into account whether the home has been properly priced for the area, as Banks and Mortgage companies selling a foreclosure usually have done a thorough data collection from other Realtors and sometimes appraisers, and have a good idea on what the value is.
Most of the time they have it listed as a discounted property because they want to move it quickly to a sale. So going in super low in the early days of the listing is usually not going to get consideration, and if you really want to buy the home at that price you will most likely have to wait until they drop the price to a range where you offer would be considered.
The risk of course is that someone else will place a higher offer and buy the home before that happens. If you want to find out more about foreclosures in the Battle Creek area or Southwest Michigan, give me a call at: 269-441-8182. www.michaeldelaware.com.