7 Steps From NJ Real Estate Experts For Purchasing a Bank-Owned or REO Property

NJ Real Estate experts believe that great deals can come from buying foreclosed homes

With the number of foreclosed homes on the rise, now is a great time to capitalize and purchase Real Estate at a low price according to NJ Real Estate experts. Generally there are 3 different stages at which a foreclosed home can be purchased. The first stage of default occurs prior to a foreclosure auction taking place in which home buyers or investors are free to purchase the home. The second stage takes place when investors or other buyers can purchase the property at a public foreclosure auction. In the final stage, the property is repossessed by the bank in the event that there are no bids on the subject property at the auction. It is at this time that the property is most likely listed for sale through a NJ Real Estate agent, and ready for purchase. As with any other investment, much research, time and patience is required.

Below are steps to take to increase your chances of a smooth transaction when purchasing a bank-owned property:

Research properties.

At the final phase of foreclosure, properties are most likely listed in the NJ MLS by agents and ready to be sold. If you are working with a NJ Realtor, he or she will have access to these properties to show them to you and assist with further action when you have decided on a home.

Figure out how much money you will save.

In order to find out how much of a bargain you will potentially receive, you will want to know information such as the approximate market value of the home, the break-even amount for the bank and the approximate total monthly expenditures. Next, subtract your expenses as a buyer from the home’s approximate market to arrive at the figure you should submit as your initial offer to the bank, according to NJ Real Estate experts.

Submit an offer.

Once you have found the home in which you are interested, the next step is to submit an offer to purchase. NJ Real Estate experts claim that although the bank owns the property, they are still eager to sell and are open to negotiate the price. If you wanted to submit a low offer, you will need documentation to validate your reasoning such as pictures and repair cost estimates.

Negotiate.

During this stage of the transaction, NJ Real Estate experts advise to not be afraid to negotiate a lower asking price, a lower down payment amount, reduced interest rate and reduced closing costs. Often times, lenders will be able to accommodate requests and offer things such as lower closing costs, interest rates or down payments. To increase your chances of obtaining a better deal, consider buying the property in “as is” condition and be able to prove that you have financing and are able to close quickly.

Obtain financing.

If you have decent credit, many banks will be willing to lend the entire price of the property, and occasionally even more. If the subject home is being purchased as an investment property, lenders will typically require a 10% down payment. However, investors with a significant amount of equity in another home may be eligible for a line of credit in order to purchase a bank-owned property, which then can be transferred to a mortgage requiring no down payment.

Perform a title search.

This is a key component in the transaction, as any liens discovered can ultimately increase the price of the home. Although banks should obtain clear title prior to placing the home on the market, NJ Real Estate experts say do not assume this is the case in all situations.

Close the deal.

Once all signed paperwork has been submitted, approved, and all inspections have been completed, you are ready to close on the home.

The Real Estate market is changing rapidly and expanding into new avenues almost daily. Sometimes it can be very difficult to find the answers you need on a specific topic or issue. In times like these, you need a Real Estate professional who will provide valuable information and trustworthy advice. For more information on NJ Real Estate, call us today or click here to be connected with one of our top Real Estate specialists.