So you want to buy a house. You've heard all the horror stories about buying a short sale or a bank owned property. Maybe you have talked to a real estate agent or you have simply searched the internet. However you have chosen to search, you quickly realized that there aren't a lot turn-key properties on the market. It seems like almost every house for sale is either in pre-foreclosure (short sale) or is already bank owned. So how do you go about navigating the current real estate market?
In today’s housing market, now more than ever, it is critical to align yourself with a good real estate agent. With the abundance of properties requiring bank approval it is very easy to get lost in the bidding game without ever really having the chance of actually closing a deal. Not only does the buyer’s agent have to have the knowledge and expertise to successfully close one of these transactions but the sellers agent also has to have the knowledge and experience to successfully negotiate with the multitude of lenders to get the deal done.
There are several factors that you must consider when searching for a home and making an offer:
· How knowledgeable is your buyer agent?
o It is critical in this market to work with a qualified representative when searching for a home. Although your agent is representing you as the buyer, it is critical that they understand the transaction from the listing agent perspective. Without this knowledge you may find yourself chasing properties that have no chance to close. A qualified buyer’s agent will be able to ascertain from discussions with the listing agent a reasonable likelihood that your offer will be seen by the bank and if it has a good chance to close.
· How knowledgeable is the listing agent?
o Short sales are very time consuming. They require a tremendous amount of knowledge and effort to close. They require constant follow up and communication with the bank asset managers as well as the banks loss mitigation group. There is a lot of turnover in the banking industry and losing a sale because the loss mitigation department and the asset management department weren’t communicating and the listing agent wasn’t on top of their game is very disheartening for the buyer. A knowledgeable buyer agent will help you steer clear of properties and representation that isn’t well equipped to proceed through these challenging waters.
· How many offers have already been made on the property?
o Let’s be realistic here. The bank is already overwhelmed with all of their “underperforming” assets”. Their asset managers have piles of paper they have to weed through and property upon property they have to deal with. The bank doesn’t want to deal with multiple offers! The bank wants its listing agents to deal with multiple offers and submit, submit the best offer and keep the others as backup. If the listing agent has already received lots of offers the chance that yours is going to be the “best” offer is greatly reduced. Don’t expect to negotiate your offer. In this market it just not going to happen.
· How long can you wait to receive an answer?
o This is another one of those “let’s be realistic” kind of things. With a conventional sale the buyer can stipulate the terms of the deal including its expiration. With a short sale or a bank owned property this simply isn’t the case. The banks are overwhelmed and will respond to offers, well, when they respond to offers. They do it on their terms and in their time. You can certainly write any contingency into the contract that you want, and I highly recommend that you do, but you still have to be prepared for a lengthy wait to find out if your offer has been considered.
To sum it all up, now more than ever you need professional representation when buying a home. A knowledgeable buyer agent will work with you to find the right property and they will work as your advocate to make sure the transaction goes as smoothly as possible. This doesn’t mean there won’t be obstacles and disappointments along the way, there more than likely will be, but it should mean that these are fewer and further between and that you’ll have the right information to make informed choices when navigating the current housing market.
Thanks for reading.