So, you finally feel you are ready to buy a home and you can't wait to go online to search for properties. Especially, when you hear that you can get a great deal on a bank repo. Well, let me provide you with the real scoop on foreclosures.
Yes, it is true bank repos are usually priced below market value. Unfortunately, pricing bank repo's below market value usually leads to multiple offers. That is if the property is in a desirable area and even more so if it is in good condition. So, what needs to be taken into account is how much can you offer? Let's take for example a bank repo property that is listed at $300,000 in a favorable location and you qualify for that much. This leads you to think. This property could be mine, but if you like it, there are probably 10 other people that are thinking the same thing. This is when you have to realize that if another interested pary qualifies for more than $300,000 then they will probably get it. What is happening is that some bank repo properties are becoming their own micro "hot market". Let me provide you with another real example. I previewed a property (bank repo) in a very beautiful neighborhood that had not been on the market for a day, by the time I returned to the office the property had an accepted offer. It had not even been one day.
Another fact to consider is that there are buyers who are bringing all cash to the table. There are others who are putting 20 to 50 percent down. So, the competition can be fierce. Lastly, once an offer is accepted please be aware that if you do not close on time there can be a per diem charge. All this is not to say don't buy foreclosures. It is just important to know the realities of this type of market so you won't be in for too many surprises.