Have you decided on the forclosure home that you want, and are you ready to buy? There are many methods that will help you get ready as you proceed with the purchase for your forclosure home.

Rules for Bidding on Forclosure Homes:

If the home you have chosen to look at is a bank forclosure, the bidding rules are pretty easy. You will want to get in touch with your real estate agent or the listing agent and let them know that you are interested in the forclosure home. After that, you will want to do a couple of other things.

1. You will need a pre approval letter from your mortgage loan officer. The letter need only be the amount you plan to offer and no more.

2. You can then ask your real estate agent to forward the letter to the listing agent expressing intent to purchase the forclosure home. This letter is different than a contract because the only things it includes are general topics such as the price, suggested closing date and financing.

3. When the letter is received by the listing agent, it will from there be forwarded to the bank that is holding the forclosure property. This process will take around 7 to 10 days, as banks proceed cautiously and very slowly.

What Should Your Bid Be?

At this point, there are two different concerns. The first is what to bid on a forclosure home, and the second is what to bid to win the home without bidding too much and over paying. This is where the water gets a little choppy. Banks are different from HUD or VA because they determine the price they are willing to accept on a per property basis. The VA and HUD have preset levels. You should never try to underbid what the bank owes. When the home has been on the market for three to six months, you might be able to get away with this.

You shouldn't worry about bidding below the amount mortgaged for a forclosure home. You might be able to swing a 10 to 15 percent discount, but the bank may not be even that flexible when it comes to the price of the forclosure home. Offering anything less than full price can result in you losing the property to another purchaser.

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