Bank owned properties currently dominate most of California’s well priced active listings on the market. In the following report we will discuss 5 insider secrets you absolutely must know before you begin your search.
As a Sr. Loan Officer handling the home loans for many current home buyers in California, I have an advantage to being privy to what works and what doesn’t work in successfully locating and getting purchase offers accepted and closing on bank owned homes. In this special report I will provide to you some of the keys that I have learned in this unprecedented California real estate market where bank owned bargains abound.
1. You must work with a realtor that have proven experience locating and getting their clients offers accepted in bank owned properties and you must be loyal to them
Many home buyers jump from realtor to realtor as they seek out the right house for them. This is the wrong approach. The correct approach is to do some research up front to find the right Realtor and interview Realtors about the market, if they have been working with bank owned homes and what kind of success they have been having. Then once you have chosen the correct Realtor, stick with that Realtor and be loyal to them. If you are loyal to them, they will put in the time and effort to finding you the bank owned bargain you are looking for. Secondly, it is key to find a Realtor that is having success with bank owned homes. There is a lot of skill involved in locating the right bargain bank owned home and a lot of strategy involved in crafting the right offer. There are certain Realtors that have and inside track and inside knowledge and relationships with the brokers listing and selling the bank owned homes. You need to find these Realtors to represent you. Please contact me and I can put you in touch with a Realtor skillful in finding and getting offers accepted on bank owned bargains.
2. Get your expectations right
Many buyers who have not yet begun the process of making offers on properties have this false belief from what they hear in the media that they can waltz out there and make super low-ball offers and the banks will be begging them to take their homes. Let me tell you why this is not the case. The current inventory that is on the market in most California cities is made up roughly 33% private owners who are unrealistic and have their houses priced too high, 33% short sales that take too long and most buyers are avoiding and 33% bank owned homes that are priced to sell. So out of all the inventory, only 33% of it is priced to sell and has the ability to sell quickly. These are the bank owned homes. So what you have is all the buyers, investors, etc… in the market to buy all going after this 33% of the market. So get rid of the idea that you can make low-ball offers. They won’t work (except in one special case I’ll discuss below) and they will waste your time and your Realtors time. Trust me on this, as a loan officer handling home loans, I have a insider view to many, many bank owned purchases. At this point the banks know what the market price is and they have their houses priced at very good prices. Many times the properties have multiple offers. It sounds counter intuitive, but it may be in your interest to overbid if you still think it would be a good deal at the price you are offering. Prices have fallen so far off their peaks bidding over asking price might make sense in some cases.
3. Look for the fixer uppers
To get the super deep discounts you must go after the fixer upper houses. This is the one case where you may be able to get a low-ball offer to work. It’s amazing how most buyers cannot see beyond peeling paint, old carpet, outdated kitchens and overgrown lawns. These are cosmetic items that you can fix relatively cheaply. They key is if you can buy the house for a much bigger discount than the cost to fix up the house. If you can buy a house for $200,000 that will cost you $10,000 to spruce up, but will be worth $275,000 spruced up, now that is a smart investment! Once you get into the house, you can slowly fix up and spruce up the house over time and as your budget allows. Something to also think about is using a special FHA fixer upper loan that I can offer you. This loan is discussed in detail other articles on www.socalvaloans.com This loan can allow you to buy a fixer-upper and the bank will lend you the cost to buy + the cost to fix all in one loan!
4. Follow and closely track all the houses for sale in the specific neighborhood you are looking to buy in closely
This relates to any purchase you are making, but it relates even more specifically to getting bank owned bargains. If you are closely tracking the properties that are currently active for sale and properties that are going into pending status, you can often find a bank owned house that was in pending status, but now has gone back to active status. These are cases where the former buyer could not close and the property fell out of escrow. If you are closely tracking your market daily, you can pounce on these bank owned properties as soon as they become active again and often get a good deal. The bank will be motivated to get it closed since it has fallen out of escrow. Additionally, if you are tracking the market, you will often see short sales that come back on the market as bank owned homes. If you were interested in that house as a short sale, it may come back on the market as bank owned and you will be ready to pounce. Again, choosing the right Realtor is absolutely key here, and I can direct you to Realtors that I have proven skills finding bank owned bargains.
5. Making the right purchase offer
When seeking out a bank-owned bargain, it’s very important to have your purchase offer written up in a way that is attractive to the bank sellers. The banks may be getting a stack of offers and they are going to take the one that is best for them and they feel will close the fastest with the least difficulties. And once again, I can’t emphasize enough working with the right Realtor here. Once you find the right Realtor, you can discuss the essential elements of an offer that will get accepted by a bank seller, but the following are keys that I have seen that can help you get your bank owned offer accepted:
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The more “clean” your offer the better…”clean” means don’t ask for a lot of concessions
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Do not call out for a pest inspection in your offer
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Do not ask the seller to credit you for closing costs (although in many cases it still can be OK to ask the seller to pay for your closing costs if you don’t have the funds)
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Put up a larger cash deposit (the bank will think you are more serious)
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If you can, shorten your inspection and financing contingency periods (but be VERY careful with this – this is an area that it is key to work with a skillful loan officer)
So those are 5 keys to locating and purchasing a bank owned bargain in today’s market. I hoped you enjoyed this special report and if you need assistance obtaining financing your purchase please contact us at www.socalvaloans.com, 858-922-7899.
Warm Regards,
Rob Chomentowski
Sr. Loan Officer and VA loan specialist
Affinity Financial
858-922-7899
