If you are looking to buy a bank owned home, or repo, or reo, or sometimes called "corporate owned" home, you must be pre-qualified with a lender before even considering making an offer. Working with a bank requires patience and jumping through hoops. If you do not have the patience as a buyer or not willing to jump through hoops, a bank owned home is not for you.
Many of these properties are snatched up by investors because they know the rules. They know they either have to have cash and be serious and ready to buy or as we say "forgetaboutit". Investors want a deal and the smart ones make reasonable offers and end up with the property.
My experience has been that many people would love to buy a bank owned property as there are good deals out there, but they fall short because they want to play instead of being serious like an investor from the get go.
This is typical scenario: Unqualified buyer sees a real deal on a property, either for flip potential or to occupy themselves. They don't bother going to get pre-qualifed because they figure they can do that when they need to, not understanding how this works, that they "need to" NOW. Then they make a low ball offer, sometimes half the price of the listed property thinking they will come up if they need to, in the meantime, an investor comes along, makes a decent offer, is prequalifed with a lender or has cash and next thing you know we have a fully executed contract and the property is pending sale.
The buyer is ALWAYS standing there scratching his or her head, wondering what just happened. What just happened is, a prequalified serious buyer just bought the house you wanted. They didn't ding around. They made an offer and it was accepted and backed up by proof of funds or lender letter saying they were qualified to purchase at the contract price.
Sounds real easy doesn't it? It is. It isn't rocket science. It is more like 1+1=2.
These properties can be bought. But there are rules. It isn't like working with an individual who will wait until you get qualified for a loan, or should I say "sometimes wait". Some sellers don't even want their properties shown to unqualified buyers. They want serious buyers who are really considering making a purchase, not someone who just wants to look at houses.
The best way to level the playing field and compete with the investors and the smart buyers is to get pre-qualified with a lender, and don't be the King of Ding when it comes to making an offer. Make a decent offer, especially when we tell you that others are looking at the same property and the status can change any time with a phone call. Just that simple. Someone looked at a house 2 days before you did and calls to make an offer while you are trying to get prequalified for a loan. It happens all the time.
Sometimes the seller has two or more offers on a property, some will say tell all the buyers to bring their best and final offer and the best offer wins. Some will just pick the best offer and be done with it. They all do it differently.
And a big one, don't expect a bank to wait for you to sell your current house first. They won't do contracts based on a contingency such as that. No, they want to sell and not wait for you to get ready.
You also need to understand that these properties are sold "as is", in other words, what you see is what you get, what you don't see is what you get too, so look them over good and get a licensed home inspector to check it out for you. Most contracts allow some time for inspections, even on bank owned homes, but it isn't so you can negotiate repairs, because "as is" means "as is", so you are just looking for possible red flags now and down the road.
I am trying to help you see how this works on a bank owned property. I have bought a few through the years and I learned the hard way (by loosing one) that you have to be ready to buy and be serious about it, or you will see your plans go up in smoke before your eyes.
Just trying to help. Call me if you have any other questions about bank owned properties.
Mary Welch-Broker/Owner Preferred Choice Realty Harper, Ks.