AZ BUYER--HOW BANKS SELL REO'S PART III

How Banks Sell REO's

Each bank/lender works a little differently but they all want to get the best price possible and have no interest in giving away the property. If the bank is very large they will have an entire department set up to manage their REO inventory.  After you make an offer to purchase, banks usually present a "counter-offer" and/or ask for your "highest & best" offer especially when there are several bidders on a property.   The Bank's counter may be at a higher price than you expect (especially the first week a REO is listed for sale) but they have to demonstrate to investors, shareholders and auditors that they attempted to get the highest price possible. You should plan to counter the counter-offer but when multiple offers exist you may not get the opportunity to make an additional counter offer.
Additionally, your offer will have to be reviewed and approved by several individuals and/or mortgage insurance companies.  Although an offer is accepted the bank may insert verbiage like “contingent upon corporate approval within 5 days" plus include there own "AS IS" addendum.

DON'T BUY ON THE REBOUND

It happens to thousands of homeowners each year.  They find their dream home but are outbid by another buyer.  Out of frustration they buy the next house they see.  BAD IDEA!!! 

Sure, it's disappointing to lose the "perfect" house.  But rushing to find a replacement can bring an even greater regret.  The fact is that most home buyers face some kind of a setback during their home search...albeit it pricing or financing or timing.  The key is to approach each step in the home buying process as part of a valuable learning experience.  

Finally, buying a home is not the ultimate goal.  Buying the right home is the goal.  Compromising with an inadequate choice is a sure path to Buyer's remorse.  I found out a long time ago that there will be another house coming on the market soon very often better than the first one you thought was the "perfect" house.


 Courtesy of Sherri Buttler, Sun American Morgage Company  sherri.buttler@SunAmerican.com  

       






   

FIRST TIME HOMEBUYER CREDIT ENDS DECEMBER 1, 2009

To qualify for this credit, the closing date for the home must take place after December 31, 2008 and before December 1, 2009.  If a taxpayer is building a home they must occupy the home between those dates.  The credit amoung is the lesser of 10% of the purchase price of the home or $8000.  The home must be occupied by the taxpayer for 36 months.  In addition, the taxpayer must not have owned a home in the United States for three years prior to taking the credit.  Selling or converting a home to rental property before the 36-month perior may subject the taxpayer to repayment of the credit.  The credit is not available for vacation homes or rental property.  In addition, this credit also has a phase-out range based on income.  You can find details on the IRS website  http://www.irs.gov/

HOME INSPECTIONS ARE A MUST! DEMAND ONE!

As a buyer you have the right to know what you are buying...especially in today's foreclosure market where homes are being purchased in AS IS condition with no guarantees or warranties.  A professional home inspection is something you MUST do regardless whether or not it is a new or pre-owned home.  This inspection is an opportunity to have an expert look closely at the home you are considering purchasing.  It is best to have all the inspectors findings in a written report and not rely on an oral opinion as they are easily misinterpreted.

Make sure your inspector is Stated licensed and a member of ASHI (American Society of Home Inspection).  Accompany the inspector to the inspection if possible and ask questions.  If you can't be present ask a family member or close friend to represent you.

Most real estate contracts provide for an inspection to be done within a certain time period.  This inspection clause is considered a contingency to your purchasing the home.  If you don't approve the inspection, you don't have to buy.  Many times the seller will make the necessary repairs found in the Inspection
Report but sometimes they won't (as in FHA and Bank Owned Foreclosures).  If you do not approve the inspection report and wish to cancel the contract, ALWAYS put your cancellation in writing within the time period specified in the purchase contract.

DON'T MAKE MAJOR CREDIT PURCHASES DURING LOAN QUALIFICATION

Home buyers---don't go on a spending spree using credit if you are qualifying to purchase a home. Your loan pre-approval is subject to a final evaluation of your credit report just a fewdays prior to closing. Every $100 you pay per month on a credit payment could cost you about $10,000 in home eligibility ie. $300 car payment could mean that you qualify for $30,000 less in a mortgage. Even if you have sizable savings, don't make any large purchases until after closing. The last thing you want to happen is to have your loan declined and lose your new home.