Foreclosures and Failed Real Estate Offers
So you keep making offers on property and not “getting the deal”. I’ve gotten a couple of emails from buyers asking that same question who feel there are shenanigans going on. Without first hand knowledge of the actual transactions, there are a several very real dynamics in play which can affect the outcome of an offer to purchase.
First and foremost is the means of how a buyer is going to pay for the real estate purchase. Last month about forty percent of the closed sale transactions involved a bank or an investor making the decision, whether it was a short sale or a foreclosure. If you’re a buyer in this real estate market it’s a necessity to have proof of funds or a mortgage preapproval in your hot little hands. This documentation must accompany the offer.
The proof of funds must be in writing, legible and from the most current month available. If it is a short sale you’re trying to purchase and you do get the contract executed you will likely be asked to update the proof periodically.
If you’re financing your purchase have a mortgage preapproval from a reputable lender, not a vague online lender. You may be asked to apply with the bank who is selling/servicing the foreclosure. Things go smoother with less resistance so either do it or move on to another property.
Some foreclosures simply do not qualify for financing so if you’re writing contracts on properties that don’t qualify; you’re spinning your wheels and killing trees.
Simply put, there could be other buyers more qualified than you. There are properties that get listed with a 15 day “first look” period. In a nut shell, buyers who are purchasing a primary residence or using public funds get the first crack at the property. You can still place your offer if you’re not going to use it for a primary residence but your offer is on hold until that fifteen day period expires.
If a buyer doesn’t come along with the intention of making the property their primary residence your contract will then be considered. If that happens, remember that fifteen days has gone by and there are probably multiple offers to purchase competing with yours. If your offer wasn’t as robust as it needed to be, someone else will probably get the deal.
I don’t know why you wouldn’t, but if you didn’t do it before you made the offer, you’ve had fifteen days to get a market analysis and absorption rate for the area so you could offer your highest and best.
The truth of the matter is that sometimes full price offers just aren’t enough. Just because a home is listed at a certain price doesn’t mean it’s properly priced. It may even be drama priced to stimulate multiple offers.
A full price offer on a home that is priced 10-15% below market isn’t a full price offer on the value. The value is established by recent closed sale comparables and the demand in the market place.
Remember, in the foreclosure market or markets where the inventory surplus has been absorbed, committed buyers who’ve been where you are and have already written a half dozen failed offers have gotten serious about putting a roof over their head. They write offers that stick.
The secret is treating your purchase like a business and becoming immersed in the market, educated on the process and be up to date on values and demand. Sometimes that education only comes with writing a several offers that don’t work out.
Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area. Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor. If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.
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