What a bank is looking for in a foreclosure offer

What is a bank looking for in foreclosure offer

With the ever increasing number of foreclosure homes on the market, it is very likely when searching for a home to buy that you will run across a few of them. If you decided to put an offer in on a bank foreclosure property it is important to know what banks are looking for in those offers. If you have decided to look specifically for a foreclosure this whole site is loaded with properties and we are adding more each week so check back often.

Banks only want to know a few specifics when an offer comes across their desk. They are not interested in a lot of details. With the number of offers they are seeing now they boil it down to a few things we will discuss below.

Amount - How much are you offering for the home? Just because the bank owns it does not mean they are looking to give it away.

Amount down - Will you be putting down 5%, 10% or 50%? That number is important t the bank. The more money you put down the more serious a bank may look at your offer. We have actually seen numerous banks take a lower offer and accept the one with a larger down payment.

How will it be purchased - The bank wants to know if you are a cash investor, going for a conventional loan, FHA or what other type of loan may you be using to purchase the home.

Closing date - When can you close on the home? The sooner you can close on it the happier they will be. This is a key decision maker for the bank. We have actually seen banks counter on this part of the deal often. If you are a cash buyer they want a very quick closing and if you are an FHA buyer then they will typically give you a 30-40 day window to get the deal done.

Terms - What conditions are you trying to include? Banks do not like a lot of conditions, they want a nice clean sale where they will not need to repair anything or jump through hoops. Banks also know that many folks buying today are purchasing with government loans (FHA, VA, Freddie Mac, Fannie Mae, USDA) and that certain conditions have to be met for those loans. If there are competing offers on the home try and find out if they are cash or financing offers. Remember that some of the homes, because of the condition they are in, may not qualify for a government loan. If you are working with a Realtor, this is something they should be on top of.

Earnest money - This is an easy one, banks like to see more earnest money so they know you are a serious buyer. The amount of earnest money down will be based on the purchase price of the home, but at the same time they are not unreasonable. If a bank sees you are purchasing on a 3%-5% down FHA loan, they know your earnest money will not be as much. If you are a cash buyer they want to see your earnest money to come in a lot higher than an FHA loan purchase offer.

If the banks could have their way every offer would be a full price offer, for cash and closing in one week. That’s in a perfect world and as we know this is rarely the case. If your offer is a low offer, the other items on this list should be more solid. In other words if the amount of your offer is lower, then the earnest money should be more, your closing should be as quick as possible and the conditions should be kept to a minimum.