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List: Posted: 09/28/11
The housing market can feel like deep water for anyone, whether you are trying to buy or sell. With all of the terms and phrases, along with the legal and financial matters that will be put in front of you, you could feel quite overwhelmed.
One area of the housing market that has a great deal of potential, but one that you may have been overlooking, is the area of foreclosures. You will find that there are many homes that are in foreclosure, and you can get a great price on them. However, you will need to learn how to negotiate a foreclosure. This can be easy to do if you know how the process works.
Because of the way the foreclosure process works, you could be dealing with a lender, the homeowner, or even a third party when you make an offer and negotiate. Depending on when you make the offer on the home, will have a direct effect on how the negotiations go, as well.
Here are the times when you could make an offer, and how you will need to do that.
Before the Foreclosure
If you find out about the home before the event happens, then you may be able to deal with the homeowner. During this time, the homeowner could have the option to go through with a short sale instead. Your negotiations will have to be approved by the lender through the homeowner. You will need to contact the homeowner and they will work with their attorney to reach an agreement on the price.
Foreclosure at Public Auction
If the home has already reached public auction, then the process will work differently. During this time, you will have to attend an auction and put in a bid. However, since other people may be bidding on the home as well, you may have to raise your bid in order to get the house. In order to avoid spending more than you intended, be sure to set a maximum amount you are willing to spend on the home and don't be tempted to go any higher. It's easy to get carried away at an auction.
Foreclosure in REO
If a home does not sell at the house auction, it will go into bank ownership REO. REO stands for real estate owned. During this time, you will need to deal directly with the lender in order to place an offer. Oftentimes, banks want to get these homes off their hands quickly, and you may be able to get quite a good deal. In order to determine how much you want to spend on the home, be sure to have the property appraised so that you will know the true value of the home.
Purchasing a home that is in foreclosure can be an overwhelming situation. However, if you want to get a very good deal on a home, then you can make this happen with ease. Just remember that depending on the place the home is in the process will affect how you offer and who you deal with. No matter when you negotiate, be sure to have a good idea of how much you are willing to spend on the home, and stick to it.
Stephen Saunders has been a real estate broker for over 20 years. He is currently Managing Broker at Coldwell Banker Bain's Seattle office.
The material in this article is for informational purposes only. The views expressed in this article are those of the author and do not necessarily reflect the views or opinions of Local.com. See Additional Information