Generally, banks offer REO foreclosed homes at under market comparison prices.  This means every savvy homebuyer is going to make an offer and you could be up against some serious competition.

How do you make sure you select the price and terms to get your offer at the top of the list?

• Research:  Start by finding out what the bank paid by looking at the Trustee Deed or the Sheriff’s Deed.  You can obtain these documents from a title company.  Compare this price to the current listing price.
• Comparable Sales:  Market value carries the most weight with REO foreclosed homes.  Look at the last three months home sales in the area for properties that closely match in size and condition.  Also take some time to look at pending sales and active listings.
• Investing the agent:  Research the listing agent and if possible, pull their listing sale history and compare the list price to sale price ratio.  Make sure your offer falls within or above this percentage.
• Other offers:  Inquire about other offers being made.  If there are none, you can probably make your offer on the lower end of the spectrum.  If there are more than three offers, you will probably have to go more than the listed price.  Keep in mind that some of those offers may be for all cash and if your offer is dependent on financing you may want to make it worth the banks time to consider yours.Pre-approval:  Submit a pre-approval letter with your offer, not a pre-qualification.  Banks trust their own departments and may be beneficial to get a pre-approval from the bank holding the REO instead of another lender.
• Repairs & Inspections:  Don’t include repairs in your offer, as banks will most likely not be interested in completing them.  If there are major problems, try to negotiate after the home inspection and offer is accepted.
• Fees:  Splitting fees in your offer can be very appealing to the bank.  Although most don’t pay transfer fees, some may split the title costs.
• Appraisals:  If you make an offer over the list price, keep in mind that the appraisal must substantiate the offer.  

It is not uncommon for there to be several offers on one property.  Many times a bank will pick a few of the offers and ask the buyers to submit their best offer to make a final decision.  Use these tips to make sure your offer is in their final selection process.