Purchasing Foreclosure and Bank-Owned Properties
Purchasing Foreclosures and Bank-Owned Properties:
We have been asked by clients "how is purchasing a foreclosure or bank-owned home or property different from other real estate transactions?" The shortest answer is- when making an offer on a foreclosed or bank-owned property, or even a property involved in a bankruptcy, you must submit documents with your offer that show you have the financial ability to purchase the property. The documents are usually a Pre-Qualification Letter from a bank or mortgage company showing that you are pre-approved for a mortgage up to a specified amount. In the case of a cash offer on the property, you would need a letter from your bank showing that you have liquid funds in the amount of the offer.
When submitting an offer on a property owned by a quasi-government-owned financial institution, such as Fannie Mae, specific addendums are usually required to accompany your offer. Fannie Mae has a 13 page "Real Estate Purchase Addendum" that must be completed and accompany your offer, with your pre-qualification letter, or proof-of-funds letter as explained above. Also Fannie Mae requires a copy of your earnest money deposit check, and lists some changes that must be made to the standard "Offer To Purchase And Contract" form in North Carolina. If these forms and addendums are not properly completed and submitted, your offer will not be considered.
After properly submitting an offer, addendums, pre-qualification letter, proof-of-funds, and copy of your earnest money deposit check, a negotiation takes place very similar to a standard real estate offer. You have made your offer, the bank can accept your offer, or present a counter-offer. If you receive a counter-offer, you may elect to decline, accept, or present a counter-offer to the counter-offer. This process can sometimes go back and forth for days, until price and terms are reached that are agreeable to both sides. In most completed transactions, both sides compromise somewhat. Your paid a bit more that you would have liked, and the bank got a bit less than they would have liked.
We believe that the current real estate market presents one of the best buying opportunities that we have seen in our lifetimes. A buyer has many homes from which to choose, and some exceptional opportunities to purchase foreclosed or bank-owned properties at a substantial discount from what other properties in the area may be priced.
We keep our own list of foreclosed, or bank-owned properties. Many websites that list foreclosed properties require you to join, or pay a membership fee to have access to their information, and then the information is sometimes dated, or just plain wrong. We will be happy to send you a copy of our list, just send us your email address. By the way, we do not sell email addresses to anyone, so your request will not result in a flood of junk emails. So, if you're thinking about buying a foreclosure, either for a primary home, vacation home, or for investment purposes, let us hear from you.
Your Mountain Dreams Team