| Foreclosure DataBank |

A Guide to Negotiating the Best Offer on a Foreclosure or Pre-Foreclosure

Contents

Introduction……………………… 1

Pre-Foreclosure................... 2

Public Auction………………….. 3

REO…………………………………… 4

Contact Info………………………. 5

Just because you’re not an expert doesn’t mean you should be too intimidated about making an offer on a foreclosure. You don’t have to start with offering more than you ideally want to pay because you think your offer will be too low. If you’ve researched similar foreclosed houses and adjusted your offer for any liens or repairs needed on the home, your offer should be fair. Remember that your negotiation dealings will vary depending on which stage of the foreclosure process the property is in. You’ll either be making an offer to the homeowner, a third party seller, trustee or the lender who financed the home. This guide will take you through the process of negotiating offers during the pre-foreclosure, public auction and REO stages of foreclosure.

[Volume 1, Issue 1]

Pre-Foreclosure

2

The homeowner may arrange with the lender to sell the home as a short sale to pay back their default and avoid a foreclosure. You’ll be dealing mostly with the homeowner in this stage, but any offers you make must be approved by the lender. If a trustee or attorney is involved, you’ll have to contact them as well. To start the process of negotiating an offer on a short sale:

Contact the trustee or attorney: The homeowner may have months after the

Notice Of Default (NOD) or Lis Pendens (LIS) is issued to pay back their default or

sell their home in a short sale. The trustee or attorney will be able to tell you if the

property is still facing foreclosure. There’s no use wasting time trying to make an

offer on a home that is no longer available.

Contact the homeowner: If the homeowner has not already listed their home as a

short sale, you may want to send them a postcard expressing your interest in the

property. Remember to be sensitive to the homeowner’s situation; try to avoid

mentioning foreclosure in the postcard. You may want to hire a real estate agent if

you’d prefer to contact the owner more directly.

Negotiate your price: If the homeowner is interested in selling their home to you as

a short sale, it’s time to negotiate payment. Obtain a title search and hire a contractor

and/or appraiser to look over the home if you can. If the homeowner cannot afford to

pay off liens on the home or make any repairs before the sale, subtract these costs

from your offer.

Offer to help the seller: There has likely been some difficulties and hardships that

led to the homeowner defaulting on their loan. The homeowner may be more

receptive if you can let them continue living in the home as a renter for the first

couple of months after the sale. You can also offer to pay housing costs for the first

couple of months after the owner finds a new home.

Public Auction

2

At this stage in the foreclosure process, the trustee has been

authorized by a judge or the lender to issue a notice of sale

and allow the home to sell at auction. Foreclosure auctions

happen quickly and can be overwhelming if you are not

prepared. To get the best bargain on a foreclosed home:

Witness the auction process: You may want

to attend some foreclosure auctions as a

spectator to get an idea of what they can be

like. Be sure to especially take note of similar

foreclosures and what people are bidding for

them. This can help you form an idea of how

much you should offer.

Contact the seller named in the listing: The

homeowner may have up to five business days

before the foreclosure sale to pay off their

default. Foreclosure auctions can also be

postponed or terminated in short notice. You’ll

need to speak to the attorney or trustee to find

out if the listing is still current. Ask as much as

you can about the property during this time.

Research the property: Ideally you’ll want to

run a title search to find any liens or debts on

the property and hire professionals to give you

their estimate. However, because foreclosure

auctions can be very fast-paced, you may not

have time to do this before the sale. Find out as

much as you can about the property and keep it

in mind when making your bid.

Have your maximum bid pre-set: It’s easy to get caught up in fast-paced auctions and make bids for more than you want on home foreclosures. Use your comparative figures from similar foreclosure properties, other foreclosure auctions, and repair and debt estimates. If someone outbids your maximum offer, don’t outbid them in your frustration. You’ll know it’s not worth it.

At this stage, the foreclosed property has likely already been through a public auction where it failed to sell. A short sale is no longer possible at this stage as the home is now in ownership of the lender who financed the defaulted loan. If the lender is a large bank with a dedicated REO department, they may sell the property themselves. To make an offer on an REO:

4

Contact the lender: If you don’t have access to the REO listing, you can find out

the name and address of the bank in ownership of the property through the local

property accessor. You may have to make a direct request to the bank to be able

to see their REO listings.

Hire a real estate agent: While this is not absolutely necessary, banks and

lenders are less willing to cooperate with inexperienced buyers. Even if this is not

the first time you’ve purchased a foreclosed home, having a real estate agent

represent you can increase your chances.

Inspect the home: As with the pre-foreclosure and public auction stages in the

foreclosure process, you’ll want to know the title condition and have the property

professionally appraised. You’ll want to take the cost of any debts or repairs into

consideration when making your offer and subtract them from the total.

Make your offer: Making an offer on an REO is similar to making an offer on a

short sale. The difference is the homeowner isn’t involved. It’s easy to think that

getting a good deal is impossible without a stressed and desperate homeowner

hoping to be cut a break. However banks make no money form having homes in

their possession, so they want to unload them quickly.

REO

5

Foreclosure DataBank

1602 Alton Road #432 Miami Beach, FL 33139 1-888-596-9279 ForeclosureDataBank.com@gmail.com

The biggest foreclosures database on the web

Find us on the Web: www.ForeclosureDataBank.com

Remember that research is the most important factor to getting a good bargain on a foreclosed property. Since sales can happen quickly it may not always be possible to obtain all the information you want, but you should at least research prices from similar sales. If you can’t run a title search or have the property inspected, set aside funds for potential debts and repairs.

For more helpful guides on buying and investing in home foreclosures, go to our blog for the latest articles on foreclosures http://bit.ly/bdatabankblog.