Ultimately, the purpose of all your house foreclosure research is to decide whether a distressed property is a good bargain. To the outstanding unpaid loan balance you need to add all the liens against the property and any estimated repair costs and then subtract that total from the market value of the real estate foreclosure. If the difference is a strong positive number, you can approach the owner armed with your calculations and begin negotiating a possible sale.
Investors must deduct all expenses associated with buying, repairing, borrowing, holding and closing again, from the price they hope to get. Homebuyers should negotiate around the four discount factors: price, down payment, interest rate, and closing costs. The bank, being a lender, can negotiate all of these items.
Once you are comfortable with the numbers and the property, proceed with a written offer containing the following:
A statement indicating your intent to purchase the real estate
The physical address of the property
The legal description of the property
Your price
Your down payment terms
Your financing terms
Your desired closing date
Any contingencies
Your deposit information
Your name, address and phone number
Some lenders sell thousands of repo homes every year, so learn to work with them. Many sell their foreclosure properties at or near market price, and unrealistic offers will be rejected quickly. You can negotiate around interest rates, price, down payment, and other factors. Just remember to stay within reasonable boundaries if you want to succeed. Not all lenders behave the same way, so try to locate those that are more flexible in their property disposition policies.
When the bank accepts your offer, close as quickly as possible to avoid delays and complications from competitive offers.
