Today we’ll discuss tips to help you write an offer on a bank-owned property.
In the last installment of our series on writing strong offers, we focused on how to find out more about a seller’s primary motivations to sell. However, there’s another unique situation you need to know about where those tips won’t apply. When you make an offer on a bank-owned property, there are no emotions involved. Instead, you’re simply dealing with institutions, systems, guidelines, and numbers. Today I’ll share three tips on writing an offer that the bank will find acceptable.
1. Don’t make a lowball offer. The asset manager in charge of selling the house has a certain range around the list price that they’ll find acceptable—usually around 5%. If you write an offer at a really low price, you might end up having to wait another 30 days to see if they’ve lowered the asking price and then offer something less.
2. Follow the bank’s instructions. When dealing with a bank-owned property, simply follow the instructions they provide to you. That bank likely has multiple assets across the country, and they use a set system to sell off their assets, which they won’t change for interpersonal reasons.
You may be asked to show your proof of funds or a copy of your earnest money check. They may ask you to use a specific title company, or waive disclosures regarding the history of the property’s insurance claims. You may also be asked to execute an addendum from the bank. If you’re asked to do any of these things, they will be non-negotiable, as they’re set guidelines. The best thing for you to do is to focus solely on the price.
3. Do not ask the bank to make repairs. Simply consider the condition of the property and adjust your offer accordingly so that you can have enough available to make the repairs yourself after the closing. The bank doesn’t want the risk of putting extra money into the property prior to closing.
There are many other things to consider when it comes to working with bank-owned properties, but these are just a few tips to keep in mind. If you’re interested in purchasing foreclosures, distressed properties, or bank-owned properties, just give me a call or send an email. I’d be happy to help.