Most real estate markets are seeing 30% or more of their transactions being lender mediated through foreclosures or short sales.
The bargain hunters continue to move in to take advantage of the bottom barrel prices, low interest rates and cornucopia of foreclosures and short sales.
Buying a Foreclosure
In dealing with a foreclosure the banks selling them are mainly concerned with price. You as the buyer need to determine what the right price is for you regardless of their asking price.
This is where an experienced real estate agent can greatly improve your chances of not only getting the home, but also getting a better price and making it a smooth transaction.
A buyers agent can get important answers to questions like how long has the home been on the market, when was their last price reduction and how much, any city required repairs and research comparable sales.
The answers to these questions can educate you about the market and also give you an informed decision on what price you should offer.
While multiple offers are common to see on foreclosures there are a few strategies that can strengthen your offer.
With the credit market tightening, a cash offer can beat out an offer that is contingent on getting financing. In fact, it's common to see banks accept cash offers that are thousands of dollars less than an offer that is higher but is contingent on obtaining financing.
Other helpful tips include: offer to close in 30 days or less, remove the inspection contingency, if you are financing do not ask for any seller paid closing costs and do not ask the bank to perform any repairs.
Buying a Short Sale
A short sale is where the lender allows a property to be sold for less than the amount owed on a mortgage and the lender agrees to take a loss.
While a short sale home is usually in much better condition than the foreclosure there are some big pitfalls.
Short sales can be very frustrating for all involved. It's not uncommon to wait 90 days or more before getting a response from a bank on accepting or declining an offer.
Also, many of the homes on the MLS labeled as a short sale are not truly sellable. Just because a property is listed as a short sale it doesn't necessarily mean the lender will accept your offer, even if the home owner accepted it.
So before you write an offer on a short sale, do your best to know what you are in for prior to writing the offer. Your real estate agent should be able to find out where in the process the listing agent is with the short sale approval.
The key really is to verify it is a pre-negotiated short sale. Meaning the seller has met the qualifications of a short sale and all necessary documentation has been provided to the bank.
Kevin Curtis is a licensed agent with RE/MAX Advantage Plus and The Minnesota Real Estate Team. The #1 Re/Max team in MN for 2006-2009. Search for Minnesota and Minneapolis Real Estate including foreclosures and get ongoing insights into the Minnesota Real Estate market at MinnesotaPropertiesOnline.com. You can follow Kevin Curtis on Twitter
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