Buying foreclosure or REO property in Manchester, Connecticut can sometimes provide you with a great bargain. Not all foreclosure or REO properties are great bargains. How can you make sure your offer is great and more likely to be accepted by the bank or owner of the property? Use these six tips for a successful offer:
- What did the current owner pay for the property and what kind of loan did they use. This matters so you can see what the bank may need to receive in selling the property. If the original loan was an FHA loan there is insurance that will cover 100% of the shortfall (if there is one). Getting this answer usually requires going to town hall and that can also provide you with information about the status of the property.
- The market value of the property. You want to know what that is today and if the property needs work what it will be with that work completed. You care about what the property is worth repaired since you will need to pay for those repairs. You don't want to "over pay" for the property so at minimum the cost of the repairs should be subtracted from the after repaired value in determining your offer. Considering there are great unknowns in renovating properties you should subtract some extra to give yourself room for error.
- Scrutinize the REO and foreclosure listings. – Look at the value of other foreclosure or REO homes andnormal "arms length" transactions. What kind of "discount" do foreclosure or REO properties receive in Manchester? This takes a little detective work since know the condition of they were in is difficult.
- Cash offer. – The banks usually prefer cash offers. But we know there is little possibility that you will make a true cash offer, nice idea right?. What can you do to make your offer stronger? Ask about an FHA 203k loan, it will allow you to have the money to buy and fix up the property in one loan. A bank will respect that loan option as having more likelihood of closing. Make sure to not only talk with but show your loan officer your pay stubs, bank statements and make sure that your credit has been pulled BEFORE writing your offer. How you calculate your income and how an underwriter do may be two different things, one may not qualify you for the home you want. Make sure your loan officer knows the property is in need of work, or is a foreclosure. This may limit the loan programs that can be used.
- Take into account the number of offers. – Your offer should also be dependent upon the number of offers that have been made for the property. If the house has been on the market for many, many months with no takers it might be possible to offer less, but likewise don't expect a low-ball offer to be accepted on a clean ready to move in foreclosure with heavy showing traffic 2 days after going on the market.
- Inspection – Banks don't like inspections, so do them BEFORE making your offer, or understand most banks will sell "as-is". An "as-is" contract might allow you to inspect after going to contract it might not allow you to exit the contract for inspection issues. Might as well inspect before making the offer and becoming obligated to purchase the property.
These six tips will help you to successfully make an offer on a foreclosure or REO property in Manchester, CT. Are you looking to purchase a foreclosure or REO property in Manchester, CT or the surrounding towns? Ask about an FHA 203k loan. A 203k loan will allow you the finds to both purchase a home in need of repair, but also the money you need to pay for those repairs. Thanks to http://www.flickr.com/photos/jbhill/ for a great photo.
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As quoted in the New York Times "A Little-Known Loan Program", and in the Hartford Courant "Moving In:Couple Combining Households Buys In Newington" and "Moving In... New Britain"