Here’s 3 key factors to consider when negotiating offers on a foreclosure.

I’ve based this on an example of a condo listed for sale in Tampa, Fl at $149,900. By the way, the unit originally sold for $269,000 back in 2005.

1. In this case the bank has already priced it at the lowest price per sq ft for sold units at $122.00. per sq ft.
2. How long is the bank planning on waiting for other offers to come in?
3. Are there currently other offers on the table?

Driving factors and why you may want to consider offering more:

I just recevied this email from another agent here in our firm.  He’s been working with a client for a couple months and it seems the buyer’s expectations are not inline with our market. “Sean has been frustrated by not being able to buy a foreclosure for less than asking price.”  He’s given up and has not requested any further information”  Looks like Sean has some competition.

.A foreclosure (REO) can close in 30 days or less. That makes it even more enticing because some people can’t wait months for a short sale. The bottom line is that they are willing to pay more instead of paying $1,200 in rent for another 6 months while they are waiting for a short sale. Makes sense.

What’s causing the bidding war? The Tampa Real Estate market’s inventory is down to 5 months, from 22 months 5 years. (You can download the latest housing report here). There’s not much to choose from, especially in the lower-end price ranges, and in desirable areas like South Tampa, where most of my clients are looking to buy at the moment.

Tips on how to deal with multiple offers:

The mentality of buyers when they know another offer exists is something you have to consider. As a general rule in this price range I would suggest bidding about 1K more than what I think someone else will offer. I can only speak from my experience as a Relator. If there are multiple offers most people would go up 5K on a 150K asking price. So an offer of 156K may get you the winning bid. Now, if everyone is thinking like me, why not add another $500.00 to be on the safe side?

We will never know what the other offers are, their financing terms, when the buyer wants to close and so on. My guess is that the bank would like to get it off the books by the end of the year. If someone is financing that most likely won’t happen, so a cash offer may be a more aggressive approach.

Ask yourself how badly do I want the buy this home? A few thousand dollars in the end isn’t going to make much of a difference obviously.

Remember, anyone looking in your price range is thinking the same strategy as you, crunching the numbers and looking at the comparable sales.

Feel free to take my opinion for what it’s worth:) oh, and if you don’t already have a Real Estate Agent that can guide you I’m happy to help.

See Also: Step By Step Process of Making an Offer Q &A

Timing Couldn’t Be Much Better for First-time Homebuyers–
Be Sure You Make the Right Moves

By Rae Catanese, PA
Prudential Tropical Realty-Tampa, Fl

First-time homebuyers dominated the U.S. real estate market in 2009, accounting for roughly half of all residential transactions, according to the National Association of REALTORS®.

That trend is likely to continue well into the new year. That’s because interest rates are hovering near all-time lows, home-price affordability is near all-time highs and a third factor – Congress’ extension of the first-time homebuyer tax credit until April 30, 2010 – make conditions quite favorable for those considering homeownership for the first time.

Still, with the prospect of making one of the largest investments you’ll ever make in your life, you can easily become overwhelmed.

Some of the questions you may be asking are:

Will I be able to afford the home of my dreams? Do I have enough money for a down payment? Will I qualify for the tax credit? Will I make smart home buying decisions? If you go into the process prepared, your first purchase – like the current timing – can be just right.

The costs involved in the purchase of a home can seem overwhelming to first-time homebuyers. There are mortgage costs, the down payment, and closing costs to think about.

1.  Affordability–By looking at your income and debt ratio, your sales professional can help you calculate how much you can afford each month in mortgage payments.  But before determining your price range, you should also take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, insurance, homeowner association dues, utilities and maintenance. And if your down payment is less than 20 percent of the cost of the home, you will be responsible for private mortgage insurance, more commonly referred to as PMI.

2.  Mortgage payment–Fear of being rejected for a home loan is one of the main concerns for first-time homebuyers. To lessen the stress, you may want to get pre-approved for a loan before looking at prospective homes. This will not only help you feel more confident, it will also give you an advantage where there are multiple offers for a specific property. In addition, the fact that your loan has already been approved is of great value to the seller because it shortens the purchase process, and there is less of a chance that the buyer will back out of the sale. If you don’t have a specific mortgage lender in mind, ask your sales professional for a recommendation.

3.  Down payment–The down payment amount varies depending on the value of the home you choose and your mortgage lender. Your real estate professional will be able to explain the different options available to you.

4.  Tax credit–The first-time homebuyer tax credit, a key component of the American Recovery and Reinvestment Act of 2009, equates to as much as $8,000, or 10% of a principal residence’s purchase price, and is available to those who have not owned a principal residence in the past three years. You can use the tax credit to help purchase your home or help pay for its closing costs, or the credit can be used to remodel, refurnish and repair your property. See your tax advisor for details about the tax-credit program and how you may benefit. 

5.  Making offers–Don’t feel pressured into making an offer on the first home you see. This is a common mistake of many first-time homebuyers. Make sure you view different homes to get a feel for the marketplace. When you decide on a home to make a bid on, work with your real estate professional to get all of your questions answered before making an offer. But don’t wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.

Above all, remember there are no silly questions. Make sure you understand and are comfortable with every aspect of the transaction. Your real estate professional can be an invaluable asset in helping you make educated decisions so that your first home purchase is a rewarding experience.

Need a Buyer’s Agent? Questions? Email me or Call: 813 784 7744

Search all homes in Tampa Bay!

A friend, author and colleague of mine Dan Auito,  just released a new Real Estate Investing Book called 

“Be A Real Estate Heavyweight.”

 

This is a real estate investing tool and resource. Learn how to invest in foreclosures and bank-owned REOs

There are many wanna be real estate investors out there and in today’s Real Estate Market it’s no wonder why everyone wants to get in on the foreclosure boom!  We may never see another market crash, especially here in Tampa Bay, in our lifetime. 

Why is Be A Real Estate Heavyweight the BEST Real Estate Investing Book?

This Real Estate Investment book boasts 95 authors that are sharing actual experience that is working in the field TODAY!   This is post bubble real estate investing, these are the NEW methods being used NOW.

Click Here for the table of contents!

A brief Example:

Author                                           Article

Jarom Adair ……………………The 7 Great Lies of Real Estate Investing

Peter Vekselman ……………Avoiding Real Estate Mistakes & Pitfalls 

Preston Ely …………………….. 7 Steps to Real Estate Riches 

Tyler Hicks ………………………How to Get Rich in Real Estate on Zero Cash 100% Financing

 This manual gives investors a more comprehensive approach to intelligence gathering. Capitalize on the collective significance of the available information aggregated from some of our brightest real estate investors in their fields today.

In this real estate investing book, he literally maps out
the only systems that are working in
today’s real estate economy.

…And what’s really cool is the way
he explains it and makes it all so EASY
to understand.

There’s 2 really good chapters
of what is working in real estate today
 download free
chapters.

Whether you are looking to purchase foreclosures, distressed homes, vacation property or a home for you and your family, this guide will give you the knowledge you need.

I’m sure you’ll like this and benefit
from the content …so check it out!

First Time Home Buyers Seminar @ IKEA

“$500 certificate for closing costs to anyone that attends”