Real Strategies for Bank Owned Properties- Part 2 THE OFFER

Offers, while cash may be king and helpful when placing offers, it is not the bottom line in consideration.

1. Overall Net of Offer.  This is what the bank is going to receive, your offer price minus any closing cost credits, repairs, home warranties, termite extermination costs etc.

2. How You Are Going to Pay For It.  Cash is best, conventional is ok, FHA, VA or other special programs can make the banks leery that complications will arise due to the higher expectations set on the house for loan approval. If the house is in fairly good condition then this is less of a consideration and over all net price is key.

3. Cleanest Offer Possible.  The more things you ask for (such as termite clearance, repairs  of obvious faults in the house, home warranty) the more opportunities for the bank to say no because another offeree may not have made so many requests. They will take the cleanest offer possible when all other factors are equal. They want in and out of the transaction as soon as possible. The more things asked for, especially repairs, the more opportunities for things to go wrong for them. I am not suggesting that you buy a house without having done your own due diligence. You  still should get to know everything about the house you can once the bank accepts your offer. This may include paying for your own termite report so you can ensure that you know what you are getting. Then if something significant does come up on the report, you can address it with the bank in a request for repairs during the escrow period.

4. Amount of Earnest Money Deposit.  One percent of the purchase price is minimum but if you are placing a cash offer, are competing against similar offers, or are placing an offer on a house that has already fallen out of escrow once, a larger deposit could get your offer accepted.

5. Escrow Duration.  Banks don't want a long escrow--45 days is usually the longest time frame they will accept, but saying you can close in 10 days doesn't really help either. Bank escrows have a challenge getting everything done in a timely manner. Plus banks have negotiated lower fees with escrow companies so their transactions aren't always priority. Thirty day escrows are really as competitive as you can get. Besides if you don't close on time they charge a per diem fee for every day you go past the closing date, even weekends. Normally the daily charge is $50-100. Usually you can get the fee waived, but why risk it, use the 30 day escrow time.

6. Down Payment Amount.  The larger the down payment is, the higher the possibility that the buyer has resources and options that will help them overcome  possible obstacles and close the transaction.

When placing an offer, always work closely with your agent to strategize how to make your offer the most competitive it can be without putting too much onus on you. Use the above list to see where you can give a little in effort to gain a lot--a new home.