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Low Balling a Foreclosure
Foreclosures are supposed to be good deals. Therefore, many buyers mistakenly think that they should “low ball” a foreclosure with an offer well under the asking price. The opposite is actually true.
Foreclosures can often be good deals because they are priced aggressively. They are already good deals. Often, they get full price offers, or even over asking offers in multiple-offer situations.
Realistically, unless the foreclosure has been on the market at least 60+ days, you are only going to get a 1-2% discount off the asking price.
You are negotiating with the bank or their asset manager when you make an offer on a foreclosure. In the Fort Hood area, nearly 2/3 of foreclosures are owned by the Department of Veterans Affairs. VA foreclosures are actually fairly simple to make offers on (minus that they don’t accept electronic signatures on the paperwork).
Some foreclosures like on Hubzu do not require a contract to make an offer. Your agent can make the offer online on your behalf. If they accept your offer, they then send you the contract to sign and execute.
Foreclosures often have their own contracts. Some use the same TAR contract but have their own addendum.
Closing Costs and Repairs
Foreclosures seldom offer closing costs. Often, if you want those covered in your offer, you will need to add them into your asking price (e.g., ask for $3000 in closing costs by adding $3000 to your offer price). That is a dramatic change in the buyer-friendly Fort Hood area where sellers frequently concede closing costs.
Most foreclosure sellers will never make repairs to the home.
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