Buying a Foreclosed Home in Las Vegas
In working with buyers in the Las Vegas market I have found that we must employ specific strategies to actually get our buyer’s offer accepted. Many buyers have to learn these strategies the hard way by trial and error. They usually would like to take a position of offering the bank a substantially lower offer than list price with the hope it will be accepted. There are several elements to a bank offer that all buyers should understand.
While the banks have no personal, hands on knowledge of the property other than what the listing agent and maybe some other agents have told them, they do know enough to establish the current market value of a home. The bank will also normally employ an appraiser in advance of listing the property to further verify the price.
The bank also knows that some buyers are better than others. The bank loves cash, but they will insist it be verified. They ask for “Proof of Funds” to accompany all cash offers. The bank will normally give some discount for cash, but not as much as most buyers think. The bank will not sell a home for $150,000 cash if they can get $175,000 by being patient with a buyer that has financing.
Making the Offer
The banks are list their homes at prices that are below current market value. This encourages multiple offers and a sale price that lands above the offered list price. This strategy turns off buyers but has proven very effective. When you prepare an offer on a bank-owned home, know the market and make your offer appropriate for that value. If a home that is a model match just recently sold and was in pristine condition down the street, your offer on the bank home should start at that number and subtract the value of the items that need to be repaired. The bank will valuate the home and that is the way another buyer will evaluate the home. So if you are competing against other buyers, you will be in a position to get the home.
Competing offers are a huge turn off for many buyers. My clients ask me if I think the bank really has these other offers or maybe they are just trying to get them to offer more. I won’t say that isn’t a possibility, but why would the bank say there was another better offer, if there weren’t. If they were “bluffing”, they risk losing a good buyer for their home. If the bank has no other offers, where are they now?
Structuring the Offer
The structure of an offer is a big deal to banks as they prefer simple offers. I have had clients write cash offers and then ask the bank to pay for closing costs. This strategy usually backfires as the bank will do a “Net Proceeds” evaluation and determine the true value of the offer. I normally suggest that buyers writing cash offers write the offer at a price that they are satisfied with the check they are writing, including closing costs, is the right sized check for the home.
Closing the Deal
This leads to the thought of closing costs as it pertains to appraisals. Buyers need to understand that the seller will adjust the contribution to buyers closing costs down as a first measure if an appraisal comes in low. I normally encourage buyers that are going to be in a competitive situation to present an offer with as little assistance from the seller as possible. That makes my client’s offer more attractive to the banks as they consider the competing offers.
We use a variety of strategies at the Brown Blankfeld Group to help our clients get the home they want and at a great price. These strategies are what help set us apart from our competition.
The one thing I can tell you about any market when it comes to Real Estate is this: If you don’t like the market now, wait a minute, it will be different.