Here are your basic tips to take advantage of this fantastic home buying opportunity:
1) Get pre-approved with an experienced HAWAII LENDER! This is a MUST! In today’s fast-paced REO market, bank owned and foreclosure property sellers will not even look at an offer unless you have a mortgage pre-approval! Sometimes, banks like Wells Fargo will insist that you also get pre-approved with them before making an offer on one of their homes. You do not have to actually get your financing from them, but they want their own people to make sure you are qualified in the event they accept your offer. ONLY if you intend to pay all cash, and can PROVE it with an account statement or bank letter (recent) when you submit your offer, will you get away without having to have a pre-approval. No offense meant, but in the world of REOs, nobody cares that you have a 780 FICO and 40 percent down payment — GET PRE-APPROVED first!
2) Use an EXPERIENCED REO BROKER! You can buy a bank owned property through ANY Real Estate agent. But hiring your best friend or cousin Charlie is not a good idea if you want to be successful and get the best deal. Many experienced (traditional sale) agents have never sold a bank owned home. Example: 90-day close with a 30-day extension or second day on market, 70 percent of list price offer, with a “but it’s all cash with a fast closing.” Not all agents are the same! The best news is that it costs you nothing to hire the most experienced broker; the bank will compensate me directly for finding a qualified buyer for the home!
3) Be patient! Here’s the story: MOST banks are buying back properties at public auction because the mortgages and their expenses are far greater than the value of the property, so nobody made the minimum bid. After auction, the banks GENERALLY put the properties on the market with one of their preferred REO listing agents at a price they consider to be “market value.” In my experience, many times this price is too aggressive and not a great deal, so the home sits on the market awhile. It could be weeks, months or even years for the bank to get the price down. MOST will eventually lower the price until it is too attractive to refuse. You HAVE TO BE READY when that happens. Using e-mail notifications from me will alert you to all price reductions. That being said, the trend now is that some banks are pricing their REOs very attractively and are great deals the second they hit the market. Again, another reason to get on my instant e-mail notification alert for homes that match your criteria, so that you don’t miss the perfect home simply because you were too late finding out about it.
4) Don’t be TOO patient! What we mean is, you must lose the concept that “prices may drop further.” Here’s what Warren Buffet, the richest man in the world, says: “Be afraid when everyone is greedy and be greedy when everybody else is afraid.” He made his wealth doing the opposite of conventional thinking. Today, most buyers are “on the fence” waiting for prices to stop falling, while the savvy investors are buying as many bank owned homes as they can while the opportunity is here! Donald Trump, bad hair but smart investor, is now buying! Are you?
5) Bank owned properties ALL need some work! “As is” is the word when buying distressed properties. That’s one of the reasons these homes can be such a good deal, but you have to understand that you are taking more of a risk than when you buy a conventional resale home. Risk can equal big rewards. Are you handy? Can you get a rehabilitation loan? Can you fix broken pipes and water damage? How about mold? You should know that there are loan programs that can get you into a fixer-upper!
If you are ready to join the savvy home buyers who are already in the market to buy a bank owned REO property on Maui, I would appreciate the opportunity of an interview to see if it would be a win-win working together! Call now!
A one-bedroom/two-bath REO condominium is available at Hale Royale.