Need Quick Answers
I plan on making an offer tomorrow on a house the lender bought at the foreclosure sale last Friday (7/30). I can pay the entire foreclosure judgement amount ($102,000), but obviously I would like to buy it for less if I can. The exterior could use some cosmetic work. I have no idea of the condition of the interior or its structural integrity (although I have no reason to suspect there are problems). Do lenders typically allow you to inspect REOs before you submit an offer? Naturally I want to deduct the repair costs from my offer. Would it be okay to submit a written offer saying something like the price is contingent on an inspection and estimated repair costs? I am concerned if I take too long doing my due diligence another investor may snap it up. The house's after-repair value is probably between $130 and $140k). Thanks in advance for your replies.
cmon -
A couple of words of caution... First - RELAX... Going after a place this aggressively will wind you up making ill advised moves. Let's consider what's going on here. First, it sounds like the lender bought it back at the sherrifs sale, yes? One of the drawbacks of buying at sherrif's sales is that you have a limited ability to inspect the place. Now it's an REO. In these cases, it's normal for the lender to list the propoerty with a local real estate broker. This, in effect, outsources the issues of getting the best price for the property to the local broker, rather than some agent in Wherever, NY. It also buys you time and access to inspect.
Bottom line, they will very likely not sell it Monday or Tuesday - it will likely take months. It's important to get your hat into the ring, but I wouldn't go rushing down there with an offer sheet in my hand. Do you know the lender? Have you asked them if they list their stuff with a local broker? If not, they are most likely a very localized bank. That can be a very cool thing, if they know you and you have some cash to put down. In any case, just let them know that you are _curious_ about the place. In these cases they will generally let you inspect all you want - at your expense and BEFORE making an offer. Go inspect it, figure out what number makes sense for you, MAKE SURE that you include some profit for yourself THEN make them an offer. If it truly is a hot property, this process could take a few days. Think of it this way: Why would a bank NOT wait a day or two if they have a bunch of interested buyers that they can get into a bidding war?
Best of luck on this,
Jeff
I would definitely call them tomorrow. But first, have the previous owners moved out? If not, if you buy the property now, you will be dealing with angry tenants that you will probably have to evict. That might be scary for some people.....I would tell the lender you are prepared to make an offer. Ask if you can inspect first or if you shoud make your offer "subject to inspection." Remember, the early bird gets the worm, but make sure your comps are correct and your repair estimates are correct before you close escrow. Make sure you include holding costs, closing costs, commissions (if you are going to flip it) etc before you sell yourself short. Even though there is a max of $40k equity right now, that still doesn't give you much wiggle room if there are a bunch of repairs or if it will take several months to re-sell it.....
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I would definitely go for it, then. Are you pre-qualified or pre-approved with a lender? If not, I would do that ASAP. Some lenders require pre-approval, not just a pre-qualification. The difference being a pre-qual can be done in a few minutes (basically a credit check and answering a few questions about income, etc) versus a pre-approval where they review pay stubs, tax returns, credit, etc......good luck. Sounds like a real possibility!
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