It is common practice that when a condominium goes into foreclosure, the owner of the condominium is given a short period of time in which he or she can pay the debt and continue to reside in the condominium. However, if the debt is not paid and the time period elapses, the condominium is put out for auction, where potential buyers are given an opportunity to buy the condominium at a discount. Nonetheless, if there are no buyers in the auction, then the condominium is returned to the bank, which then hires a realtor to market the foreclosed condominium. It is advised that inexperienced investors should opt to buy foreclosed condominium from banks, as they give major discounts on properties for a quick sale.
When planning to buy a condominium, the first thing is to search for the one which suit your budget range and is located close to your workplace. You can also log on to the websites of prominent banks to have a look at the condos available for sale.
It is recommended that you contact the REO (real estate owned) department, asset management department or bank-owned homes department, and if the condominium is listed with a real estate agent, then you contact the agent. The purpose for making these calls is to schedule a time when you can view the condominium. You need to be reminded here that bank owned properties are sold ‘As is’ which means the banks do not make any repairs in the property. For this reason, it is important that you thoroughly inspect the condominium before investing your money. If you purchase the property without a proper inspection, then any problems you discover after the purchase will be yours to take care of and the bank will not help you in anyway.
Before you can make an offer, you will need a pre-approval letter, which you can obtain from a lender. This should be for the maximum amount you can and want to spend. It is a practice of many banks to demand a pre-approval letter when any offer is made or presented on foreclosed property.
You can then fax your offer for the purchase of the condominium to the bank. This offer should include both the terms of closing and the purchase. You then have to wait for the bank’s response. The bank can either accept or reject the offer made by you or instead make a counter offer, which will generally ask for more than your initial offer. Once either party accepts an offer, the deal can be sealed and you can own the condo.