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Replies (12)
- Michael Emery, "MikeEmery"
- Contributions:7298
There are four criteria for bank owned homes in this scenario (in no order).
1. Cash is better than credit.
2. Homeowners take precedent over investors ( listing agents won't even submit an offer from an investor until the 1st look period ends).
3. The faster the closing time the better for the bank (just make sure your lender can close in the time you choose or you will be out $100 per day (plus) until it closes.
4. Anything close to a full price offer (with a reasonable closing time) will gain the quickest response from the asset manager. But if you choose to go with a lesser offer (assuming it's not insanely low) the asset manager will most likely counter offer anyways. Have your agent determine what Freddie is requiring for a down payment.
As part of your offer, take advantage of any incentives they are offering. They will often cover 'up to' 3 percent of your closing costs and give you a 2 year warranty.
And to protect yourself, get it inspected and buy title insurance that covers both YOU and your lender. Often if you use Freddies title company they might even throw in a buyers policy for free.
1. Cash is better than credit.
2. Homeowners take precedent over investors ( listing agents won't even submit an offer from an investor until the 1st look period ends).
3. The faster the closing time the better for the bank (just make sure your lender can close in the time you choose or you will be out $100 per day (plus) until it closes.
4. Anything close to a full price offer (with a reasonable closing time) will gain the quickest response from the asset manager. But if you choose to go with a lesser offer (assuming it's not insanely low) the asset manager will most likely counter offer anyways. Have your agent determine what Freddie is requiring for a down payment.
As part of your offer, take advantage of any incentives they are offering. They will often cover 'up to' 3 percent of your closing costs and give you a 2 year warranty.
And to protect yourself, get it inspected and buy title insurance that covers both YOU and your lender. Often if you use Freddies title company they might even throw in a buyers policy for free.
- momof2andboo
- Contributions:6
Thank you Michael...If all goes well tomorrow and it looks great would you recommend negotiating the price? Or would you just offer full and negotiate with the closing and warranty?
- Michael Emery, "MikeEmery"
- Contributions:7298
I can't advise you on price as I don't know whether the home is properly priced as compared to similar homes.
There is a misperception that all bank owned homes are properly priced. This is not always the case. The last bank owned property I negotiated went from $39,000 list to $20,000 sold (cash). The actual value was between $25-30,000.
Another point I missed is bank owned homes are sold 'as is'. So if in your professional inspection you discover the property needs repairs, the bank may or may not lower the price to accommodate the cost of repairs. So make sure that you and your agent thoroughly go through the home to see if there are any visible repairs you will need to do (I'm not talking paint on the walls) and keep those repairs in mind when making your offer.
But always ALWAYS have it inspected, regardless of whether or not the home is sold 'as is'.
Good luck.
There is a misperception that all bank owned homes are properly priced. This is not always the case. The last bank owned property I negotiated went from $39,000 list to $20,000 sold (cash). The actual value was between $25-30,000.
Another point I missed is bank owned homes are sold 'as is'. So if in your professional inspection you discover the property needs repairs, the bank may or may not lower the price to accommodate the cost of repairs. So make sure that you and your agent thoroughly go through the home to see if there are any visible repairs you will need to do (I'm not talking paint on the walls) and keep those repairs in mind when making your offer.
But always ALWAYS have it inspected, regardless of whether or not the home is sold 'as is'.
Good luck.
- momof2andboo
- Contributions:6
Also with the period ending on 2/3 for owner occupants, does that mean that they will accept all offers until that day and then weed through the offers they have after that time period?
- momof2andboo
- Contributions:6
Yes it did say SOLS AS IS, and I would definately have it inspected. I am just sure that this home will produce alot of interest as like I stated this is definately an area that the market is not flooded with home sales and it is a very desirable area. As far as home inspection would you make that a contingency in your offer or is that even possible in a home sold as is?
- Michael Emery, "MikeEmery"
- Contributions:7298
They will only accept offers from buyers who intend to live in the home for at least one year. Chances are if they had a strong offer from that pool, they would move forward with that offer. Absent any offers within that time period they will open it up to investors too.
If this is the one (!) write up your offer tomorrow or over the weekend (I like to sleep on big purchases) and make sure your agent submits it to the listing agent before Monday morning. Typically REO listing agents work Monday through Friday as well as the asset managers that determine whether or not your offer is accepted. If I were the agent I would email it prior to Monday. The listing agent would then electronically submit it to the asset manager. Also have your agent ask the listing agent if there are any incoming or presented offers.
Do you have a pre approval letter from your lender? You will need one to submit an offer.
The listing will continue to be marketed until they receive your offer and until they verbally accept your offer AND until they receive your earnest money check (which they will deposit within a day or two). Time is of the essence with bank owned homes - especially if the price is right and their is a shortage of quality properties in the area.
If this is the one (!) write up your offer tomorrow or over the weekend (I like to sleep on big purchases) and make sure your agent submits it to the listing agent before Monday morning. Typically REO listing agents work Monday through Friday as well as the asset managers that determine whether or not your offer is accepted. If I were the agent I would email it prior to Monday. The listing agent would then electronically submit it to the asset manager. Also have your agent ask the listing agent if there are any incoming or presented offers.
Do you have a pre approval letter from your lender? You will need one to submit an offer.
The listing will continue to be marketed until they receive your offer and until they verbally accept your offer AND until they receive your earnest money check (which they will deposit within a day or two). Time is of the essence with bank owned homes - especially if the price is right and their is a shortage of quality properties in the area.
- momof2andboo
- Contributions:6
Thank you sooo much Michael, you have been a tremendous help. Like I said, I am a first time home buyer and not wanting to get overly anxious, but have been looking for months and need to move quickly to get out of my rental house and this just seems like the perfect fit....I have even looked to see if there were any specialist in my area regarding these type properties that can walk us through this whole process and insure that we are making the right decisions, have not found one yet. Cannot get the listing agent to call me back, but with it listed on MLS going to have a agent that we have worked with prior to show us the property tomorrow...
- Ryan Halset, "RyanHalset"
- Contributions:730
I often make offer on both Freddie Mac & Fannie Mae properties...I'm just confirming that Michael is offering a lot of very sound advice.
A few notes:
- Absolutely get an inspection.
- Make sure your agent fills out all forms EXACTLY as provided to give you the best opportunity at the quickest response and accepted offer. If the bank (or listing agents) need to send anything back for signature, you're giving other buyers an opportunity at your house.
- If you verify that the price is good and you would be devastated to lose it - offer asking (or close to it) to wrap it up quickly. I've had a lot of buyers lose out on a deal just because they were trying to save a few thousand (when they would have paid full price). Some of these homes can go really quickly.
- Have your agent call the listing agent to verify that it's actually still available before writing up an offer. If there is other interest, I have found that we can gauge how quickly we need to write something up - and whether we need to write up a full price offer or not.
- Once Freddie (or Fannie) verbally accepts your offer, they won't accept any other offers, so I haven't found Michael's note that earnest money being deposited with escrow a requirement to pull the home off the market in my area (Seattle). Of course earnest money does need to be deposited within a specified period of time (per their contract).
Good Luck!
Ryan Halset, Realtor®
Boardwalk Real Estate, LLC | Seattle, Wa
A few notes:
- Absolutely get an inspection.
- Make sure your agent fills out all forms EXACTLY as provided to give you the best opportunity at the quickest response and accepted offer. If the bank (or listing agents) need to send anything back for signature, you're giving other buyers an opportunity at your house.
- If you verify that the price is good and you would be devastated to lose it - offer asking (or close to it) to wrap it up quickly. I've had a lot of buyers lose out on a deal just because they were trying to save a few thousand (when they would have paid full price). Some of these homes can go really quickly.
- Have your agent call the listing agent to verify that it's actually still available before writing up an offer. If there is other interest, I have found that we can gauge how quickly we need to write something up - and whether we need to write up a full price offer or not.
- Once Freddie (or Fannie) verbally accepts your offer, they won't accept any other offers, so I haven't found Michael's note that earnest money being deposited with escrow a requirement to pull the home off the market in my area (Seattle). Of course earnest money does need to be deposited within a specified period of time (per their contract).
Good Luck!
Ryan Halset, Realtor®
Boardwalk Real Estate, LLC | Seattle, Wa
- Michael Emery, "MikeEmery"
- Contributions:7298
The earnest money 'threat' is perhaps something being done by the agents. The last transaction I had the agent said get it in as soon as you can. Other agents said GET IT IN WITHIN 24 HOURS OR YOU WILL LOSE OUT!
Good point about the contract language. That sucker has to be letter perfect or the listing agent will kick it back (has happened to me). Something as dumb as 'buyer is John Q. Public' and the buyer signs John Public will get it kicked back to you. And make sure your agent downloads ALL the forms from MLS. There are additional forms required in bank owned properties other than the standard purchase agreement. As they say, time is of the essence.
Good point about the contract language. That sucker has to be letter perfect or the listing agent will kick it back (has happened to me). Something as dumb as 'buyer is John Q. Public' and the buyer signs John Public will get it kicked back to you. And make sure your agent downloads ALL the forms from MLS. There are additional forms required in bank owned properties other than the standard purchase agreement. As they say, time is of the essence.
- momof2andboo
- Contributions:6
Just in from looking at the house. All appears to be to good to be true. The house was near perfect. The major things such as roof, gutters, vinyl windows, HVAC system all appeared to be nearly new. The house is brick with all vinyl so it maintenance free. Cosmetically there were some things I would change, landscaping, maybe newer appliances in kitchen, and paint but other than that all looked GREAT. Now I am home a nervous wreck trying to come up with my offer by this afternoon. I am considering offering full asking price with assistance from them in the 3% closing and home warranty. This offer would be a real deal for the house if it was accepted, I just find myself maybe a little antsy as this is exactly where we want to be and well below our set budget...This house just appeared on MLS on the 18th and the 15 day First Look Initiative period does not expire until 2/3/2012 , he has numerous appointments still to show the house. Just worried that this may not be a strong enough offer.....Any assistance would be abundantly appreciated....
- Michael Emery, "MikeEmery"
- Contributions:7298
Without seeing the home, we can't tell you what to offer. What we CAN tell you is whatever you offer it has to APPRAISE for the purchase price. This is suppose to be the 'check' to prevent folks from offering more than the actual value.
If there are multiple offers, the listing agent MAY (not guaranteed) ask all parties for their highest and best offer by xx date 2012.
Was the 3 percent closing costs and warranty offered as part of the First Look package? If so, chances are everyone will ask for it.
What does your agent say?
If there are multiple offers, the listing agent MAY (not guaranteed) ask all parties for their highest and best offer by xx date 2012.
Was the 3 percent closing costs and warranty offered as part of the First Look package? If so, chances are everyone will ask for it.
What does your agent say?
- Wes Black
- Contributions:509
Michael's answer is pretty darn complete. If you and your realtor are satisfied with the asking price I would probably ask 96% of the asking price. Just my opinion. Do you have time to have home inspector and an appraiser before your offer is submitted. This would make you feel more comfortable?
Just looked at a Freddie Mac First Look Initiative home today (expires on 2/3)
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