Not every foreclosure may be a bargain today, but there are amazing deals to be found on distressed properties all over the country.
Still, if you want to make big money by buying foreclosures, or at least be able to brag to your friends about just how great of a deal you got on your new home, you’ll want to check out the following 6 pro tips for getting the biggest discounts.
1. Cash is King
Cash buyers definitely have the upper hand in the current market. Cash offers give the REO lender confidence, and it may accept less than if the offer is contingent on obtaining a mortgage. If you don’t have the free liquid funds, can you use monies from a poorly performing retirement account, partner up with someone else, or find another way to borrow cash early?
2. Close Fast
The faster and sooner you offer to close the more likely your bid is to be accepted.
3. Track Property Listings
You may not always get your first offer accepted, but that doesn’t mean you can’t make a deal happen. Keep tabs on REO opportunities when lenders may become more motivated or have more negotiating room.
4. Follow the Path of Least Resistance
If you have the stomach for it, go after properties that others are afraid to take on and that are receiving very few inquiries. Ugly houses and those with structural repairs often offer the biggest discounts and most flexible lenders. Do your homework, get quotes for repairs, and you may find huge profits to be had, while being able to demand your own terms.
5. Negotiate Your Real Estate Agent’s Commission
If you are working with a real estate agent, you may be able to negotiate their commission. Even though the REO lender pays their commission, higher fees mean less net profit. If your real estate agent is willing to only give a discount on commission, your bid may beat one where the lender must pay a full commission.
6. Timing Your Offers
Banks have monthly and quarterly figures to report, and making an offer just in time to help pump up those numbers could enable you to get away with more than normal.