Lenders aren't chartered to own and manage property, so they face close scrutiny and pressure from state and federal regulators to dispose of foreclosed properties quickly - especially if they're on a regulator's "watch list".
When their REO departments are loaded with foreclosures, investors are able to finagle below-market interest rates with little or no cash down. And because they're dealing directly with the bank they can eliminate the 6 percent sales commission if they act fast - before the bank lists the property with a real estate agent.
If you have great credit you should require that a bank provide you with a "loan to facilitate" instead of paying them all cash. That will allow you to buy a lot more properties with your limited funds and make the bank happier by purchasing several foreclosure bargains at a time rather than just one.
The profile of a lender that's especially vulnerable to making you a great deal is one where:
This approach means that you wouldn't reimburse them for any accumulated charges such as interest, late charges, foreclosure fees, legal fees, nor any advances they might have made toward senior loans, property taxes, insurance, etc.
A big eye opener as to what a harried lender might take would be to research your local public records for the past year or so in the Grantor/Grantee index to see what prices they got for other recently disposed of REO's.
Finally, insist that the lender provide you with all the customary buyer safeguards such as escrow, title insurance, homeowner's warranty, termite clearance, etc.
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