1. GET PRE-APPROVED: Before even looking at a home you should get pre-approved for a loan. No bank will look at your offer without it. Meet with a local and trusted mortgage broker, they can prequailify you at no cost, they will look at your credit plus your financials and let you know if there are any mortgages that you may qualify for. You should then tell them you are looking at bank owned homes so they can provide you with a list of what condition the property needs to be in for you to be able to get a mortgage.
2. WHO IS REPRESENTING YOU? : You should know that the listing agent represents the seller. there are some advantages working directly with a listing agent if you feel comfortable with buying. If not you may want to hire a buyer broker who is WELL EXPERIENCED in bank owned home sales. An inexperienced agent can hurt more than help. You can usually hire a buyer broker at no cost to you, they get paid their commission from the fee advertised in MLS by the listing agent and paid at closing. This way they can get the information for you and you will have someone assisting you through each step of the buying process.
3. MAKING AN OFFER THE HOUSE: Before making your offer you should know that most houses are sold “AS IS”. The banks will not re-negotiate after a home inspection or make any repairs. Your best chance to get the bank to make repairs or credit you for repairs is in your initial offer. You can often inspect the property before you put in the offer. If you don’t want to spend the money for some reason, then when looking at the home you are going to need to look at the well, septic, roof, siding, windows, heating system, look under the sinks, in the basement for signs of water or mold, stains on the ceilings and anything that sticks out or if you are getting an fha loan, any safety issues.
Before making an offer, you and your agent should assess what the house is worth in todays market and deduct for any repairs needed. Do not base your offer on a percentage off an asking price. You dont know if the bank priced the house higher than market value, already at market value or priced it way below market value.
4. THE OFFER: In your offer you should make sure your agent attaches your pre-approval letter, you should make sure you put a closing date of 30 days or less, make sure your deposit is at least 3% of the sales price and it is a cashiers check. Try and avoid any contingencies other than an inspection and mortgage contingency. Do not put any expiration dates in for the bank answering the offer.
5. KNOW THE TIME LINES: You should know that each bank works differently than any other. The Listing agent has a great deal responsibility to assist the asset manager and move the offer through the process of approval or counter offer. You can ask the listing agent what the average is for the bank. Banks can take days to answer an offer. Most banks however respond within 1 day and alot of times it is the same day. Allow 3-7 days from acceptance to get you the signed purchase and sales contract and addendum package. The one thing you can do to speed up your own closing is to make sure the foreclosure deed is complete and recorded, otherwise this could hold up your closing.