G-SIG - Real Estate

So you might have been noticing a substantial number of “bank owned listings” entering the market lately. If you are looking to buy a home, well this is your time.

Now if you are not familiar with bank owned homes, let me be the enlightener. Bank owned homes are basically homes that have been foreclosed. Say a homeowner cannot afford his payments anymore and stop paying. The bank or lender would than follow through by filing foreclosure on the property to get possession of it. Once the previous ownership of the home shifts from the previous owner to the lender’s, it than becomes what is known as a bank owned home.

So far, not much positive info huh? Well, this is where the good stuff kicks in. Praise to you with the resources to be able to buy a home in this market. There are a ton of bank owned homes hitting your local property listings and even more so filed every week. When you have this many properties, it drives the prices of the homes down considerably. Hence, we see the real estate market collapse. But because the prices are so low, you can buy awesome homes for incredible prices. Right now, real estate investors are making a killing just buying old beat up homes at literally pennies on the dollar and flipping them over at retail price. When I say pennies on the dollar, basically, they are buying homes worth 200 thousand dollars in TODAY’S market for less than 50% of the market value.

But what does this all mean to you? It means you are in an excellent position my friend. You are in a buyer’s market and you want to buy a home! All of those million dollar mansions are now half the price so if you always wanted one of those, well start shopping because the banks are itching to get those off their books. Buy, baby, Buy! buy! buy!

So now that we have established that the market is highly in your favor, let’s explain why you should and shouldn’t tackle a bank owned deal. First off, banks want to get rid of there properties. Wait, let me restate that. The desperately need to sell their properties! They have so many homes in inventory that they can barely hire enough people to sell liquidate them. So the banks price their properties at very competitive and sometime ludicrously low prices. But in exchange, they want things done on their terms and in their way. They are giving you a steal basically. Might as well play a little by their rules shall we not?

First off, a majority (a very large percentage) of bank owned homes are sold AS IS. Meaning there is no warranty on the home. You will need to get it inspected and properly looked over before committing to buy. “As Is” means what is means. It is sold to you as is in the condition it’s in, with or without the Chinese drywall. To solve this issue, get an inspector to look through all potential homes. Make sure they are licensed and insured – so if they botch up and miss the fact that there’s lead paint, you are all covered.

Secondly, cash up front or proof of financing. Banks are looking to get homes sold FAST. They will completely disregard your offer unless you have proof of funds or financing. Now if you got the dough to through down, all you would need is a bank draft or statement with the amount on there. And you are all set to start offering on properties. Now, if you need a mortgage, get pre-qualified first. Again, the banks are in it to sell their real estate fast and they have no time to waste waiting for you to get approval. Get an approval first and than start approaching the offering tables. But as a standard rule, the banks are the seller, and the seller has ultimate decisions on which offer to take. They LOVE cash offers and would take one any day over a mortgaged offer. Cash is just that much quicker and therefore, balances their books that much faster. So if you plan to low-ball them, and by all means please do, make sure you hit them with cash.

Lastly, get the price you want. This is a buyer’s market! There are tons of homes for sale. If the bank doesn’t want to take your offer, don’t fret. The house right next door or across the street may enter foreclosure soon and will be on the market later in the year. In this real estate market, anything can happen. The banks are not sitting on their high horse in the position of negotiating. YOU ARE. If the deal doesn’t suit what you like, walk away, chances are they will contact you later if the property doesn’t sell, and hey, you may even pick it up cheaper!