Snag a great foreclosure deal to make the most of your money

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By: Good Nelly
on 2nd Feb,2012

Foreclosure rate has dipped to its lowest level since 2007.
Snag a great foreclosure deal to make the most of your money

Foreclosure rate has dipped to its lowest level since 2007. The total foreclosure filings and repossessions have decreased by 33% in the year 2011. Documentation problems and back logged court systems are mainly responsible for the drop in foreclosure rates. However, as the necessary formalities are completed, foreclosure rates will again soar in this year. So, it can be said that 2012 will be a good time to grab a good foreclosure deal.

Understanding the psychology of the bankers is must when you're planning to purchase a foreclosed home at a low price. Read along to know about some tips that can prove to be helpful when you're shopping for a foreclosed house.

Grab a good foreclosure deal in 2012

Here are some tips to get a good foreclosure deal in this year.

1. Don't forget to do your home work: Some of the agents advertise low price for the foreclosed homes. They do it to grab the attention of the potential buyers. Once the buyers like the home, the agents start bargaining with them. Do research on the properties before making an offer. Find out the actual value of the home and determine if you can afford to pay it. Check out the market value of the other foreclosed homes in the same locality. This will help you know if the agent is giving a correct estimate to you. 

2. Avoid making a terribly low offer: It is pointless to make a terribly low offer on the foreclosed home. It will be a mistake to make such an offer on a home that has been in the market only for a few days. Bankers will not like to sell the homes at a low price hastily. They would want to explore the market before reaching any decision. If you make a low offer on the foreclosed home, then chances are high that your proposal will be rejected. 

Usually, asset management companies determine the sale price of the foreclosed homes. They set price at par with the market value of the normal homes. Thereafter, they are given instructions on how much of a reduction is permitted within a certain period of time.

It is true that you should not make a drastically lower offer to the lender/banker. However, this does not imply that you need to wait for the lender to slash the price. If you think that the lender is charging an exorbitant price, then you can wait for a couple of months. See, if the house is still available in the market. If it is, then you may be able to get the house at a lower price. 

3. Make payments in cash: The best way to grab a lucrative foreclosure deal is to pay in cash. If you depend upon mortgage, then it will take around 1-2 months to close the deal. However, if you pay in cash, then you can close the deal within 10 days. The financial transaction will be quick. Time is crucial. You may very well lose the deal because of the delay.

If you don't have enough cash to pay the banker, then seek financial help from your friends and relatives. You can return the money in the next few months. If required, you can take out a mortgage loan after purchasing the foreclosed home. You can pay back your friends and relatives with that money.

Lastly, bankers like to do simple deals. So, it will be a mistake to incorporate too many clauses in the contract. Make a simple offer to the bank. Avoid asking banks to renovate various parts of the house. Try to make a large down payment for it will make your offer more appealing to the banker.

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