I've been spending lots of time looking at houses with prospective buyers lately and one pattern that I've seen is that buyers who are too tentative or unprepared to actually make an offer end up losing out on the really good deals, especially foreclosure deals. Now, I certainly don't advise leaping in before you are comfortable with a house, but one also risks loosing out, if after 2-3 visits to the house and after the bank has lowered the price to the "dump it" level, you still can't pull the trigger on making an offer. It's really sad to hear the coulda, woulda, shoulda conversations between buyers after they've "lost" a house that they really liked by not being quick enough to make an offer.
What I've seen are two main things - some people just have a hard time making a decision to stop shopping and make the offer and some people haven't prepared and positioned themselves to be able to make an offer. The first type are perpetual shoppers, who just have to see that next house and who are looking for the perfect house. When asked what it is that they want in a house, they'll often answer., "I'll know it when I see it." When I get that answer, I know that I'm the one in trouble; since I will be spending a lot of time trying to find a the perfect place for these folks. The second type of buyer has a problem that I should be able to identify and help with - they just haven't do the necessary financial preparations to be positioned to make an offer. I have mortgage people whom I can send them too for help with that.
The point of this is that, as a buyer, one needs to be ready to make and offer and one needs to really have a good understanding of what it is that you are looking for in a house. I usually spend time after each outing asking the buyers what they liked and didn't like about each house and then ask them to tell me why they wouldn't buy each house. After 2-3 outings we both should have a very good idea about what it is that they want in a house. Then if we see one, foreclosure or not, that is a good deal and meets their needs, hopefully we'll be ready to act.
With the market the way it is today, it is especially important to be ready to act, if you are looking at foreclosures. Most foreclosed properties are put on the market for a month or so at the price that the bank wants to get to recoup their failed loan. But, banks quickly tire of having too much inventory on the market, so they often dump the price down to the "sell it now" level fairly quickly. Homes that have been priced to sell like that by the bank usually don't last more than a week or two. They are just too good of a deal to pass up and there are lots of buyers out looking for those deals.
Your Realtor should be able to tell you the pricing history of the home and should have a good idea if it is priced to sell. Once a house is priced at that level, it's sort of like the old musical chairs game - the music has stopped and you'd better be ready to grab a chair ( or the house as the case may be). The slow are left standing and are out of the game. An interesting twist to this analogy is that you may end up as one of several people who are trying to sit in the same chair - multiple offers on the same house. We'll discuss that in a later blog.