Open Season For Bargains Hunters

It is becoming clearer every day that the last chapter has not been written about the decline in Real Estate prices. From Michigan to California or Nevada to Arizona, the effects of an uneasy economy are felt by individuals who face the reality of loosing their homes to foreclosure or the harsh facts of credit denial.

This picture presents a sea of opportunities for would be buyers: low prices all around. Bank owned properties that cannot be unloaded in periodic auctions compete with the individual owners or builders for the same few buyers. Those among the few who qualify for a mortgage are rewarded with pre- bust prices. Following are some steps that prospective buyers must take:
1. Secure a firm mortgage approval subject to appraisal only: a pre -approval is an in-depth process that involves a complete mortgage application backed by the submission of all income, assets and credit documentation. A pre-qualification that can be done over the phone is not sufficient.

2. Research the entire inventory in the location of interest: by entire inventory, I mean all sources of listings. These sources should be evaluated preferably in the following order: Bank owned properties, fsbo and standard listings.

Bank owned properties present the best opportunities in most instances because you are dealing with a seller whose business is to make money by lending money. Bank usually try to sell bundled properties to large customers, unsold inventory is the leftovers. Price is not the only criterion, buyers should consider the condition of the property. Financing repairs at the time of purchase is a consideration. Such mortgages that combine purchase and rehabilitation money under one loan are common, just ask an experienced broker.

FSBO sellers are those who want to save on listing fees or individuals who have seen their listings expire or those who re in such a tight spot that little room is left to play with.

Standard listings are the last ones in the search in the current market unless the agent specializes in foreclosures or is familiar with short sales negotiations. The key question to ask is what the business calls DOM or Days On the Market. It tells you how long the property has been listed for sale. This number is usually a good indicator of the state of the market. One word of caution, certain properties are re listed, this changes the picture, so ask for a two-year listing history. With the multiple listing services being common across the land, any truthful agent should be able to give you that information very easily.

3. Secure market analysis: again this is due diligence from your part so you don't end up paying too much for a property specially in a down market.

4. Property inspection: this is high returns investment. Inspections are not required by lenders, appraisals are, so if you fail to detect the problems, you will have to pay for them later. Note also that the inspection report could give you additional bargaining power.

5. Negotiate the price: it's not because the property is priced at a certain amount that you have to pay it.You never know what the real price is until you submit your offer.
There are tons of considerations that are involved in deciding on a purchase, the above is just partial offering. The final decision lies with you.