Once thought to be the best deal on the market, buyers flocked and specifically searched for foreclosures thinking that they would find the best value and most room for negotiation. "Banks will take anything", we've all heard that, right? Well, I have anyway. What most people don't take into consideration is the fact that most banks are pricing homes at fair market value and not above, like they had done in the past. Though there is always room for negotiation, the days of lowballing the banks have come to an end. Lower inventory means more competition and the likelihood of receiving multiple offers is now a very real scenario on most bank owned homes.
Here's what you may not know about the "deal" you just found. Keep these three things in mind when purchasing a foreclosure and you will do just fine.
- Everything is "AS-IS"! This is not just verbage thrown into a contract. Banks will not make repairs no matter how nice you ask. When they say the property is being sold in the condition you see it in, they mean it.
- Have money set aside for inspections. Home inspections, well inspections, pest inspections, etc., these all fall on you as costs to cover. ALWAYS have a home a inspection and a pest inspection but understand that the bank does NOT provide these for you and, in some cases, does not make it easy for you to have these done. HUD homes, Fannie Mae (Homepath) and other bank owned homes typically do not have the utilities on and they will not turn them on. You will need to be sure you are able to follow their guidelines and cover the costs to have these turned on in your name for all inspections and appraisal and turned off prior to closing.
- Be prepared for delays. Anything from title issues to lag time in paperwork and processing can cause delays in your closing. Be prepared for anything that may push your closing date back and be flexible when it comes to a closing date and time as these tend to change towards the end.