Q: I’m frustrated because I’ve been working with a buyer who will only look at foreclosures. He believes that’s where the ‘deals’ are. We keep writing low offers, which keep being rejected. I need help convincing him to write an offer the bank will accept … or I have to find a way to convince him to look at listings that are not short sales or foreclosures. Help!
A: This is a common question in today’s market. First, you need to explain the reality of the foreclosure market to your buyer. Foreclosures can be immensely complicated because there are so many stakeholders to deal with. The lender is also the property owner. There is a complicated legal process that must be followed. Title companies are often backlogged with the paperwork required by the lender and attorneys. Add all these components to the mix, and you’ve got serious challenges.
Buyers must also understand the time it takes to buy a foreclosure. Many foreclosures take months and months to close. If your buyer currently has a loan in place with an acceptable interest rate, what will he do if his transaction takes six months to close … and interest rates increase during that time? Will he still be approved to purchase the property?
It’s imperative that you have a frank discussion with your buyer about the benefits and challenges of looking only at foreclosures. Buyers always think foreclosures are a “great deal”. They can also be a great deal of work, are typically accompanied by a great deal of frustration and waiting, and always require a great deal of patience. Make sure your buyer understands, and is comfortable with, all of the challenges before you write any more offers.