Century 21 Dunaway & Hart, Inc.

Century 21 Dunaway & Hart, Inc.

Monday, February 1, 2010

How to buy a Foreclosed Home

Today's article comes to us from Century 21 Dunaway & Hart, Inc.'s Relocation and REO Director, Sherry Atkinson.

There are as many self-help books, videos, web-pages, and experts on buying Bank-owned homes as there are bank-owned homes. So, how does a buyer actually buy one of these homes?

Step one should be contacting your local real estate agent. A large majority of Bank Owned or REO properties are listed by local agents. The bank will ask a real estate broker to list these homes at market value and market these homes to the public.

A common myth is that a buyer can make a low offer and walk away with these Bank Owned Properties. In realty, the Bank is like any other Seller. They want the highest and best price for their home. An informed buyer will inspect the foreclosed property to determine the condition of the home and ask their agent to obtain comparable sales to determine the market value.

The majority of these banks require a buyer to have financing in place before making an offer to purchase. A pre-approval letter from the lender is almost always required. In fact, some Banks require that a potential Buyer get a second pre-approval letter from their own bank. The Bank will not require that the Buyer use their bank to finance but they will require a letter to ascertain that the potential buyer has met all the criteria that they require to finance a home.

Also, be prepared to present earnest money. These banks will look at the amount of earnest money or escrow funds that a buyer is willing to put up. This shows good faith to the Seller and that a buyer actually has some liquid money for closing. A good rule of thumb is $500 for properties less than $25000 and 1% of sales price for properties above $25,000.

Most banks will counter with their own addenda. Be sure to have an attorney review anything that you do not understand before signing. Your real estate agent is there to negotiate the contract but they cannot give you legal advice.

And finally, be patient. Be prepared to wait anywhere from 2 days to 1 week or longer for responses. All banks are different and all have different systems in place for responding to offers. Most banks have to go through several corporate approvals before a contract is signed.

To buy homes for sale in Conway, Arkansas or in Faulkner County, Conway County or Perry County, contact a Real Estate Agent at Century 21 Dunaway & Hart, Inc. today. Affordability and Mortgage Calculators can be found at our website so you can determine your price range.  To look at homes for sale in central Arkansas, check out all the property listings in central Arkansas, watch our television show, or read our Central Arkansas Homes Magazine. You may also call our office at 501-327-2121 or 800-490-0021 to set up a private home or land showing with one of our award winning Real Estate agents today.