How much should I offer for this foreclosed home?

How to Make an Offer on a Foreclosed Home

• Answer:

  In today's economy, the number of foreclosed homes are at an all-time high and the pickings for you are voluminous. There are reasonable steps that you must take prior to making an offer on your property of choice, though. Do not be caught holding the bag when it is time to make an offer on the perfect foreclosure deal. Difficulty: Moderately Challenging Things You'll Need Cash or a preapproval letter from a reputable bank. Comparable prices of homes in the area. Title report outlining the history of the property. Instructions Checklist Prior to Making the Offer Get preapproved for financing if you do not have cash readily available to purchase the forclosed property. When you make the offer, time could be of the essence and you do not want the logistics of financing to come between you and a great deal. Check out the comparable home prices in the area where the desired foreclosed property is located. To access comparables, you may go online to sites such as propertyshark.com and type in the property address. The website will give you the comparable pricing based upon the most recent sells in the area. Comparables may also be obtained by contacting a local real estate agent. This will aid you in determining how much profit you may reasonably earn on a foreclosed property if you are investing. Furthermore, if you are purchasing the home as a primary residence, determining the valuation beforehand will aid you in determining exactly how much is too much to finance for the home. Request a title search on the property of choice to see what if any liens are on the property. Title searches may be obtained by contacting a local title company, a real estate attorney's office or any national title company like First American Title Insurance Company or Old Republic National Title. These companies will search the property and provide you with a detailed report which certifies the record owner of the property and provides a list of all the outstanding liens currently held against the property. Seeing the property history and what is owed on the property will aid you in determining whether the investment is worthwhile. Determine to whom the offer should be made. It is critical that you determine what stage of foreclosure the home is actually in. Specifically, determine whether the lender has taken possession of the home--in which case the offer would be made to the lender--or whether the owner is still in a position to exercise a right of redemption--in which case the offer could be made to the homeowner. Ask the seller whether other offers have already been made. If possible, see what those offers were and whether they are cash offers. If there are cash offers on the table and you are financing, your offer may need to be slightly higher in order to secure the deal. Make an offer that is reasonable given all circumstances involved. You don't want to offer an amount that is way lower than any other offers on the table unless you have an incentive to do so, such as the cash in hand. Tips & Warnings Tip: If you are making an offer that is not a cash offer and making the offer to a lender, get a preapproval letter from that same lender. Chances are, the lender will find a pre-approval letter from its own financing department to be more reliable than a preapproval from another bank. Warning: With the downturn of the economy, home appraisals are coming in far lower than they did in better economic times. Therefore, if you are offering above list price, you will want to be sure that there is an appraised value to justify your offer.