So You Want to Buy a Foreclosure - “The Perfect House”, now what?
After intense research and a diligent search, you have located your “perfect” house. A few things should already be in place. The first and most important is your financing. Whether you are obtaining a mortgage loan or have cash, you should have already determined the timing and process involved. Even “cash” is difficult to obtain on short notice (unless you keep it in a mattress, which really is not a good idea). The second is your position as a consumer. You should be represented by a Realtor® who has been providing you with a steady stream of research and counsel. You should have a thorough understanding of the contract, and the process involved with creating a contract proposal and negotiating a successful outcome. What you must now confront is time and competition.
If you somehow thought you were the only one looking for your “perfect” home, I assure you that you have been thinking incorrectly. Consider that the factors that make your “perfect” home are almost certainly shared by others searching right now, just like you. Your “think it over” time has expired, and frankly, you should have been thinking it over all along. After all, that is the point of selecting a trusted Realtor® advisor, securing financing, and researching property and neighborhoods. The problem with waiting is that someone else will step in front of you and you will be back to looking. The reason you want to “think it over” is either a lack of understanding or you need the approval of someone else. If you do not have a complete understanding, then back up to your confusion point and work on gaining understanding. It is really important for your welfare that you understand the entire process, or you will always be fearful of making a bad decision. If you need the approval of someone else, then get them involved from the start. It is not fair to an outside advisor to be expected to step in at critical point and render a quick decision. Under that pressure, most people respond with “NO!” And it is generally true that you do not want to be competing with another buyer. That almost always places the seller in a better position to negotiate a stronger offer.
Your ability to negotiate an acceptable offer on any given property of course depends on you and the seller reaching agreement. The difficulty is always an incomplete understanding of seller. Whether the seller is a private individual, a corporation, or a “bank”, there is simply no way to know what they are thinking. (If you think there are inside deals, you are right, there are, some of which are illegal, and some of which appear to favor the buyer, but in reality, favor the seller. If it seems too good to be true, then it is.)
Negotiating with a private seller is usually fairly straightforward, and a conclusion to the negotiation is usually timely. The time factor here may be days or weeks. Negotiating with a corporation sometimes takes a bit more time then a private sale, and involves much more paperwork, but again is straightforward. You can almost always secure a contract form a corporation in a few days. But you want to buy a “foreclosure”.
If you are trying to negotiate with a seller in a “short sale” position, remember that the “bank” will be involved. It is the “bank” which must approve a “short sale”, because the “bank” is losing money on the sale. Negotiating with a bank to purchase a foreclosed property is anything but straightforward. To begin with, you almost never really know just who the other side is. Most “banks” employ an “asset manager” to actually care for the property and negotiate in their behalf. Most of the people in the asset management company are buried under hundreds of files representing hundreds of properties located all over the United States. They have no knowledge of the property beyond what they see in a file, and worse they do not care. Their interest is plowing through files, settling a few deals, and getting paid. Their interface with the “bank” is systematic, usually by e-mail, and the bottom line is just that which the “bank” needs today. The “bank” is really just a person trying to meet a quota of volume or income. Your offer is important only in reaching those goals. In other words, no one involved on the other side cares a hoot about your offer except as it applies to a greater picture which is constantly evolving. You must have patience. You may not receive a response from the “bank” days or even weeks. Understand, this is not about you; it is about an overworked and inefficient system.
The most important thing to understand and accept is to have patience. If you must have a home in 30 days, you will be better served to buy from a private or corporate seller that can respond easily and is not burdened with an efficient system. If you are determined to take advantage of the foreclosure market, then you must be patient and tolerant of the frustrations of dealing with a dispassionate sector of the market place.
So let’s assume that you have completed a successful negotiation and you are ready to complete the pre-closing process.
In the next article, we will discuss “Surviving the Painful Process”
Written by Larry D. McGee, Denver Realtor - Visit Website
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