5 Tips to Ensure a Successful Foreclosure Purchase

The news media is constantly reminding all of us that "foreclosures are up". Well it shouldn't be a surprise that foreclosures are up considering we had the hottest real estate market in the past 30 years with historically low foreclosures during that time period. Currently Long Beach foreclosures are less than 5% of the total real estate market. So although they are a small amount of the market, it is important to be aware (and prepared) of what you need to purchase a foreclosure property.

Here are 5 items you need to know to be prepared for the purchase of a foreclosure:

1. Offer Preparation - Each bank is different and may require different information, however it would be a safe bet to have the following: copy of a check, proof of funds to close, pre-approval letter, copy of FICO scores. Know that if you do not have this ready they listing agent will probably not even submit your offer to the bank because the bank only wants to look at complete offers.
2. Contracts - Understand your contract! Most banks will have you sign an "Addendum" to the traditional real estate purchase contract. This Addendum usually overrides aspects of the real estate purchase contract and can shorten important items like inspection periods.
3. Discounts - The banks aren't in the business of giving away their assets. So, even though you are just positive it is a "buyers market" the bank is unlikely to take 50 cents on the dollar. Have your real estate broker show you the active inventory and the closed sales so you can see how well it is priced.
4. Don't be late! - The banks want to sell their property and they don't care that you couldn't get your paystubs over to your lender in time :). The banks will usually charge $100+/day for every day you run late on your escrow so make sure you are prepared with all items dealing with your loan.
5. The leaky faucet isn't getting fixed - You are getting a deal so know that those annoying items that came up on your inspection report aren't getting fixed. The bank complies with items like water heater strapping and smoke detectors (usually), but don't think they are changing the carpet for you.

Keeping these items in mind will help you to have a successful process. Foreclosures are out there, you just have to hunt, use the Free Long Beach MLS and pour through the inventory to see what is there, or contact your local Long Beach real estate agent so they can set you up a customized search.