8 Tips for Buying a Bank Foreclosure

Successful Businesswoman

There has been a trend for buyers to go look on their own when trying to find  a find a bank foreclosure. This practice in most cases will cause you to miss the boat and miss making an offer in a timely manner. After they find the right house, then they choose their Realtor. This seems backward.  That process may have worked before, but not now. These buyers are missing out on a lot of services that Realtors bring to the table. In a way, dealing with REO properties is like being in a seller’s market again. The good homes go fast, some times within 1 day, and most of the time with multiple offers. In this case the early bird gets the worm. So how does a buyer better position themselves to buy an REO property and get their offer accepted by the bank.


New properties first show up on the MLS usually at 4 AM each morning.  Realtors are the first ones to see a new listing show up. Each Realtor has what we call “A” clients, that they work with and will call them 1st -as soon as good listing shows up. An “A” client is someone that is working exclusively with that Realtor.

If you are an “A” client, you will get the call from that Realtor telling you about the great listing that just showed up.   Even better, a Realtor can put you on their MLS auto searches that get emailed to you every morning.  If you look at those listings every day, you can stay on-top of the new listing market.

If not, you can have your Realtor keep on the look out for you. If you want a Realtor to work for you and alert you to new listings ask them for this kind of service. So clients who work with agents will be first ones to know about a new listing. So you can be the early bird!

On the other hand, buyers who do their shopping on the internet by themselves, will  see a new MLS listing 24- 72 hours after it shows up on the private Realtor MLS sites. So buyers not working through an agent might see properties up to 3 days after those who choose to work with Realtors.  Finally, there are others who do their shopping in person, those who are professional open house lookers. These buyers are missing the boat.  Not all new listings have open houses right away. By the time these buyers take action- these home may already have multiple offers on it.


Savvy buyers get pre-qualified if not pre-approved. If you are not pre-approved yet- make sure you do. If you do not know a good lender, ask your Realtor since they know who is good and will provide a smooth transaction. Most, if not all banks require a pre-qualification letter when you place an offer. Your offer will not be accepted or even considered without one. Most Realtors will not show you homes without a Pre-qualification letter.


By working with a Realtor, they can educate you about the home buying process. Once you find the right home, you will have to act fast.  Remember the early bird gets the worm. You will need to  know what payment you feel comfortable with, what your closing costs will be, and are you willing to pay any HOA or Mello Ross? Only your lender and Realtor can help you with that.


An offer with the highest price is not always the best offer. Banks these days are looking for a strong buyer that has no problem qualifying. A buyer that has a 100% loan is considered a weaker qualified buyer than a person who puts down let’s say 20%.  So if you are putting less down and want your offer to be taken seriously, what should you do?  You need to up the ante if you can, offer more money for the home and maybe the bank will like your offer better.


Make a copy of where your down payment is coming form, a bank statement, an investment, a 1031 exchange property. Black out any personal account info on it. You can also have your bank write up a letter for you as well.


Usually banks sell the property as is. Don’t ask for repairs. It is always best to keep your contingencies as short as possible. If you do not need a loan contingency, don’t use one. Ask your Realtor for advice on this one.


You will be in competition with other offers, so if it is a good home, it may be priced lower to encourage bidding wars. I called about a home the other day that had 23 offers on it.


In some cases I see homes go pending the day the house comes on the market. How does that happen? Some investors actually buy homes sight unseen. They have their Realtors scout out the homes and then make multiple offers and see which ones stick and which ones don’t. So if you are a first time home buyer, you are competing with those savvy investors that act fast. So take action. Know the market and what you want- check out the homes in the areas you want to live in.  Once you know what you want, what you want to pay, what your closing costs will be, then you qualify to actually buy a home. 

First time home owners who are prepared and heed all 8 tips for buying a Bank Foreclosure  are the ones who have a better chance getting their offers accepted. Good LUCK!

Kathy Dyer Realtor CABRE #01723710

kdyer@KW.com  831-717-7047

KW Coastal Estates

Carmel Ca. 93923

Kathy Dyer Realtor with KW Coastal Estates serving the Monterey Peninsula area


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