- #1 – Know your budget
- #2 – Know where to look for bank-mandated sales
- #3 – Do due diligence before considering bank-mandated sales
- #4 – Always think ahead
- #5 – Prepare yourself
Bank-mandated sales are a great place for buyers to find property bargains. It is the perfect opportunity to grow your investment portfolio.
Property that is sold by the banks is usually done so at below-market prices, and you might get a better interest rate than you normally would.
Bank-mandated sales also often come with discounted attorneys’ fees which can relieve a lot of pressure.
At the moment, there are so many distressed sales taking place which means that stock is high. Here are a number of tips to find property bargains at bank-mandated sales:
#1 – Know your budget
The properties that you find at bank-mandated sales are usually below the asking price which makes it easy for you to scoop a bargain. You still need to stick to your budget.
Make sure that you know how much you can spend on the mortgage every month. You should also check whether you will have enough money left to cover your monthly expenses.
The property that you find at a bank-mandated sale may need repairs. Ask yourself whether you will have enough capital to turn it into your dream home once you’ve purchased it.
#2 – Know where to look for bank-mandated sales
Bank-mandated sales aren’t always advertised and the homes aren’t always listed on property websites. This can make it difficult for buyers to see what is available.
The easiest way to find bank-mandated sales is to speak to a real estate agent. Most real estate agents are affiliated with banks and they will have inside info regarding bank-mandated sales.
It will also allow you to chat with the real estate agent about your expectations and concerns before making the final decision. Sometimes buying a distressed property isn’t the best option.
#3 – Do due diligence before considering bank-mandated sales
It is wrong to assume that all bank-mandated sales are good sales. You need to do enough research before making an offer.
Try to have a look at the current market and the value of similar properties in the neighbourhood. This will give you a better idea of where the distressed home fits into the market.
You can also talk to your local real estate agent if you want more information about the house; they will tell you if it has had tenants, if it is empty, if it has any outstanding municipal rates, or if it has any restrictions on usage.
#4 – Always think ahead
The golden rule with bank-mandated sales is that you should expect the unexpected.
Distressed properties are usually sold because the owners can’t afford the financial responsibility anymore. This usually means that the house has not been well-maintained. This information is not always disclosed to the buyer so make sure that you do a proper inspection of the property before you put in an offer.
Try to get a copy of the seller’s disclosure document where the seller lists all the faults that they are aware of. You don’t want horrible surprises once you move in.
#5 – Prepare yourself
Bank-mandated sales are swarming with buyers looking for a bargain. The competition is tough so make sure that you come prepared.
Getting prequalified would be the best way to prepare yourself. If you know what you can afford, you can act quickly before you lose out.
Set boundaries for yourself and make sure that you stick to your plan. Don’t overspend and don’t make an uninformed decision.
Buying property through a bank-mandated sale can lead to an amazing bargain but only if you’ve done your homework and you know what to expect.