In a market flooded with foreclosed homes, snagging a bargain should be easy, right?

Not necessarily. No one would deny that there are lots of deals to be had. But experts say it pays to heed some simple tips before shopping for bank-owned properties.

For one, Bankrate.com says potential buyers shouldn’t jump in with lowball offers on just-listed homes.

Asset management companies handle sales for banks, and they price foreclosed homes as close as possible to what they feel the properties are really worth.

Marty Rodriguez, owner of Century 21 Marty Rodriguez in Glendora, wouldn’t disagree with that.

“Nine times out of 10 the bank won’t look at lowball offers,” she said. “They want to wait until the house has been on the market for a little while to see what happens. They won’t give it away until they know for sure that they have to.”

But be advised, a “little while” might come and go quickly, as competition for bank-owned properties is fierce among both investors and those who want to occupy the homes.

“There are more investors out there these days, and lots of properties are getting multiple offers,” said Steve Johnson, director of the Southern California region of Metrostudy, a real estate information and consulting firm. “Right now there’s not much of an inventory on the resale market. Normally, it would be about six months, but now it’s four months.”

Many foreclosure

properties sell a day or two after being listed, Johnson said, and others are picked up within two to three weeks.

Bankrate.com also cautions buyers to avoid bidding wars. Emotion often takes over when a buyer sees a home they really want. But it pays, experts say, to find out what a property is really worth before jacking up an offer to edge out the competition. Those who don’t know the true value of the property could end up paying more than it’s worth.

Buyers are also advised to do their research but be ready to jump when a bargain becomes available.

“One of the more important things if you’re buying a residence for yourself is to know the neighborhood, the schools and the commute time you’ll have getting to work,” Johnson said. “So access to the freeway is important.”

Those who are looking to buy for investment purposes should also find out what comparable properties are renting for, Johnson said.

“You’re really going to need that positive cash flow, even if it’s only $200 a month,” he said.

Bankrate also advises buyers to borrow cash if possible. In many cases, cash can be a key tool in snagging a great deal.

For buyers who need mortgages, it can take 30 to 60 days to close on the home after the offer is accepted. The transaction will go much quicker when a buyer pays cash.

Lastly, Bankrate says clean offers and bigger deposits typically get priority.

Banks are looking for quick, and easy deals, so the less you ask for the more likely you are to get the property.

“Fannie and Freddie are giving priority to buyers who are buying the homes for themselves – especially if you are a first-time buyer,” Leung said. “But you need to be sure you’re qualified up to a certain amount before you purchase it. They don’t want to waste time waiting for you to get a loan that might eventually be denied.”

There are still plenty of bank-owned properties out there. But a report issued late last month by industry tracker DataQuick reveals that the number of California homes entering the formal foreclosure process dropped in the second quarter to their lowest level since early 2007.

The decline was fueled by an improving housing market, the gradual burning off of “the most egregious mortgages” originated from 2005 through 2007 and the growing use of short sales.

A total of 54,615 notices of default were recorded on houses and condos during the second quarter. That was down 2.9 percent from 56,258 for the previous three months of the year and down 3.6 percent from 56,633 during the same period a year earlier, DataQuick reported.

In Los Angeles County, 10,568 notices of default were recorded on homes and condos during the second quarter. That trend was reversed in the Inland Empire, however, which was widely considered Southern California’s ground zero during the housing meltdown.

San Bernardino County posted 4,487 notices of default during the April-to-June period, a 3.5 percent rise compared with 4,334 a year earlier. Riverside County’s notices of default rose 2.6 percent to 5,667.

kevin.smith@sgvn.com

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