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    What is the best way to negotiate Foreclosure when buying with Cash?

    Another great question – I hope that I will be able to convey an equally great answer.  Today’s Real Estate question comes from Sally M. calling from Saugus.  Apparently Sally has inherited some $$$ from a relative of hers and wants to jump into the Foreclosure Market feet first.  We are taking it slow with Sally due to the current market.

    However, I thought this would make a great topic of discussion.  With Foreclosures, you have a few of different profiles. First let us establish our terms:

    All Foreclosures have completed the “foreclosure process”. That entails, attorney’s, court filings and probable evictions.  After that process has played itself out, you will need to find out who the owner is.  The Foreclosure could have been sold back to the bank that owned the loan for the property.  It could also have been acquired at the Auction by someone (an individual, investor, corporation etc…)  There could have been a group of investors that are working with a investment oriented real estate agent to represent them at the auction and then assist them with flipping of the home.  It might be part of a “bulk” sale from bank to bank, bank to investor, or bank to market.

    Now that you know the possible types of ownership when it comes to Foreclosure properties – Here is the skinny.

    • Bank Owned / Real Estate Owned – All they want is the most net profit and the buyer that will stick it out and close escrow.  If they have a Conventional at 50% down versus a much lower cash buyer – they are going to choose the conventional offer. Same Cash and Same conventional – they will choose the Cash. FHA Loan Versus Conventional – Depends on the shape of the property. The interesting thing about that line up – FHA versus Conv. is that we have seen the banks choose FHA over Conventional. The reason this is, as some would say, is that the FHA appraisers are a bit more liberal with their values on Real Estate.
    • Investment Owned – Usually managed through banks or Management Companies.  These will depend on how many people have to “bless” your offer and what their individual opinions are related to the best types of financing.
    • Flips – Smaller Scale – Private: If they are getting what they want – they will take cash all day long.

    The Tricks and Strategy:  Make sure you know what the home is valued at. Find out Fair Market Value via one of our Market Snapshots or talk with your Realtor.  Once you are armed with the actual value of any particular Foreclosure – you can then make sure your Real Estate agents submits comps with your cash offer to establish to the “owner” you know what you are doing.  Cash works – the best position to be in is both Highest and BEST – Highest equates to the seller making the most profit.  The BEST indicates the type of payment that will be rendered. Cash is king, Conventional is Queen and FHA is a Prince.

    Don’t get me started – but V.A. Loans are not even on the “competitive” scale 🙁

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    Paris and Connor MacIvor

    Connor and Paris MacIvor are in the Top 1% of Realtors Nationwide, starting their real estate business in 1998 with RE/MAX Gateway - Santa Clarita Valley and Valencia CA. Their becoming licensed real estate consultants and representatives came from the horrible experience they had when they bought their first home. There were many things that the agent they had hired did not explain and disclose, which per law he should have. Getting that agent on the phone after they closed escrow and after he had gotten paid was impossible. Paris and Connor called the broker, the board of realtors, the office manager and all they received was the promise of a phone call back. The remedy did come, but not as fast and in the way they wanted. That act - that bad agent was the reason why Paris and Connor became Realtors. That was all they needed to vow to never let the same fate befall anyone else, that befell them. Today Connor and Paris are focused on client service. Protection and top-shelf service with regard to their real estate clientele. They primarily work within the Santa Clarita Valley and Valencia CA. However, for a referral, where 80+ of their business is referrals they have License and Will Travel to other parts of Ventura County, Los Angeles County, and Orange County to handle real estate transactions for those who trust their real estate operation. Writing on their Real Estate Blog is a passion. SCVnest.com/blog is where you will find over 10,000 real estate articles. Go to SCVnest.com/radio to listen to their latest real estate radio broadcast.

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