Top 5 Tips On How To Close More Bank Owned Properties
Although most of their portfolios were reduced after the market crash, the banks still own a lot of properties. New inventories are created every day and for sharp investors, the foreclosure market can provide some very good deals.
Each time a property goes into foreclosure and fails to sell, the bank remains the owner. As every investor knows, banks are not in the business of owning property. But while they may not want it, they’re not exactly going to give it away for nothing either. Getting your hands on these kinds of properties requires a degree of speed and efficiency. These five tips will help you to close more of those bank owned properties.
- Proof Of Funds. Almost all bank owned transactions are done with cash. Before you can even make an offer, you need to have your proof of funds updated. In most cases, a signed and dated proof of funds letter from your bank representative will suffice. If you’re facing competition though and want to get ahead, you can include a bank statement as well. Banks are always a bit worried that a deal might not close. An updated bank statement puts these fears to rest and leaves them in no doubt that you are ready, willing and able to close the sale.
- Earnest Money Deposit (EMD). An EMD is an amount put into a contract as a deposit when an offer is made. A vast majority of the offers are made with minimum EMD amount. By increasing yours, you are showing how serious you are about buying. If issues are uncovered in the inspection you can get your deposit back but a sudden change of heart on your part will mean losing your deposit.
- Contract And Contingencies. If there’s one thing, banks are sticklers for its paperwork. When you make an offer ensure that you have all your paperwork in order, that the contract is as clear as possible and all contingencies have been laid out. Just one forgotten signature or misplaced document could result in your offer being consigned to the bottom of the pile. Inspection should be the only contingency that you should have. There should be no financing contingency, since you are paying with cash. As all bank owned properties are almost always sold as is, make sure that the contract states how soon an inspection will be done after your offer is accepted and what your rights are, if something comes back on it.
- Quick Closing. Speed is a big part of these kinds of deals. You need to be able to respond quickly to every offer you make and to close as quickly as possible. Every day that the bank owns the property, they are paying taxes and insurance on it. So, they want to get rid of it as soon as possible. The closing period on most bank-owned properties is 30 days. If you can push that up to two weeks for instance, you stand a much better chance of getting the deal.
- Quick Response To Counteroffers. It will often happen, as in just about every property deal, that you’ll be met with a counteroffer. Exactly when that happens, it will tell you whether they have a lot of offers or need to hit a certain number to sell. If you really want the property, then you need to be ready to respond to a counteroffer quickly. The longer you delay, the more likely it is for someone else to come in and swoop the deal away from you. It should be clear in your mind how high you’re willing to go, before you even make your first offer. If you have no intention of countering an offer, you should make this clear to the bank.
Bank owned properties can be a gold mine of good deals but you have to act fast and efficiently. Play your cards right and you could come away with a superb deal.