How to Buy a Cabot Foreclosure & Get a Good Deal Part 2
4. Making an offer- I know that there are several ads on the radio and TV that mention you being able to buy a foreclosed home for pennies on the dollar. That is not true from my experiences. Normally if you can find a 20-35% discount from market value you have found a great deal. Have that real estate professional I mentioned before do a market analysis on the subject home. They will be able to tell you if it is listed at a discounted price.
Closing Costs- When making an offer you need to figure out who is going to pay closing costs. You or the seller? Most bank sellers are wiling to pay closing costs if you ask them. One thing they want in return is an offer close to their asking price. If you decide to pay your own closing costs normally it will help you in negotiations. Be sure to have your agent call your mortgage broker to find out exactly how much your closing costs and prepaids will be.
Repair Limit- Most of the time banks are not willing to help with a repair limit. They consider the home to be sold "as is where is." I normally recommend that buyers not ask for a repair limit.
Home Warranty- Always ask for a home warranty. Most of the time banks will pay for you to have one. A home warranty will cover any appliances and heating and air units for a year after you buy the home. If the bank will pay for it I would get it if you are going to live in the house for a year.
Closing Date- Banks are never in a hurry. It is a good idea to set closing out at least four to six weeks from the date of the offer.
These items are the most important issues of the offer you write to them. Normally after you write that offer it will take up to five business days for them to counter back or accept your offer. Many times the counter is verbal and once an agreement is made they will write something up.
Addendum's- After the offer is accepted the bank will send several addendum's for you to sign. The ones that I have read over are used by the banks to cover their tales. I would not get intimidated by them. The bank is just taking every effort they can to not get sued after closing. Once you sign the addendum's you are on your way.
5. Home Inspection- I strongly recommend that you hire a professional home inspector. These guys are trained and paid to find problems with the home. A home inspection will generally start at about $200. Another good reason to hire a home inspector is for the sake of your home warranty. If you have a home inspector comes in and he finds no problems with you appliances, if there are ever problems with them you can prove they were not pre- existing. A home warranty company will not cover pre-existing problems.
Many times the utilities are turned off in foreclosures. Your real estate agent or the listing agent should be able to get the utilities temporarily turned on for the home inspection.
6. Title Company- Most of the time the bank selling the home will want you to close at their title company. I have found that normally works out well. You as a buyer will get a discount normally for closing at their chosen title company. The one time I would not close at the banks title company is when the title company is out of state. I have done this before and it does not work out well. Different state laws and customs mess things up.
Once all of this is done all you have to do is wait for closing and sign your life away. I am joking it is not that bad. If you have any questions about foreclosures feel free to contact me or talk with your real estate agent about the process.
Good day