Buying foreclosures can sometimes be like chancing upon a bounty. Prices of many of the REO foreclosed homes are lower than the market price. So obviously, there is fierce competition to grab that bank-owned property. The bank scrutinizes all the offers and selects the best one as per their choice.

So, securing a REO offer is not the easiest of tasks. But, a systematic approach can go a long way in securing the deal. They can be as follows -

1. Finding out the original price - The actual price of the property would provide with a benchmark to delineate the offer you would make. The purchase price, the loan amount, the number or the total amount of mortgage payment already done and the remaining balance are the factors basing upon which you would have to fix your final offer.
2. The market value of the property - At times, the original purchase price has little bearing on the real market price of the property - such is the uncertainty of the real estate market. In such cases, making a logical study of the selling prices of the homes that are similar in size and the features in the locality, would give you a perfect idea to formulate your offer.
3. Scrutinize the REO listings - Find out the past history of the listings of the agent and try to find the out the differential amount with regards to the listing prices and the eventual selling prices of the properties. You adjust your price just marginally above the expected selling price.
4. Cash offer - The banks usually prefer cash offers. Hence, if possible try to make the payment by cash.
5. Take into account the number of offers - The pricing is also dependent upon the number of offers that have been made for the property. If there are only a couple of applications, you may place a low offer and settle for a higher one if you expect competition.
6. Approval of the owner - You should approach the owner of the property beforehand and get his approval letter. Don't expect the bank to do all this for you.
7. Inspection - The inspection and necessary repair works can be talked after the deal is over. The bank staff usually loath such discussion during the negotiation stage.

These are some of the tips that would help you in buying REO foreclosure.

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