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Savannah Bow…, Real Estate Pro in Fort Collins, CO

Through your personal experience, what would you advise your buyer to do/prepare-for when purchasing a bank-owned property?

Asked by Savannah Bowman, Fort Collins, CO Wed Feb 9, 2011

Is there anything other than the obvious (inspection/title insurance) that you wished you might have been aware of? I realize all cases are different, but I always like to hear from my felow agents.

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Different factors come in to play depending on what bank owns the property. For example, Bank of America requires that the buyer be approved by them for a mortgage even though the buyer is NOT required to use them as his lender. So be sure and find out in advance what this particular bank's policy/procedure is. In one instance I experienced, the buyer was approved by a mortgage brokerage company but was not approved by BofA's mortgage company, and he lost out. (this was before I became a Certified Short Sale & Foreclosure Specialist!). PRE-inspection for structural, mechanical and pests would be a good idea, as well as ordering a survey if one isn't furnished. The cost of these items certainly outweighs some unforeseen defect the buyer might encounter after purchase. And of course, Buyer needs to have ALL his financing ducks in a row - loan approval if financing and proof of funds if a cash purchase. and advised this will be a step-by-step process. Good luck!
1 vote Thank Flag Link Wed Feb 9, 2011
Obtain a title policy from one of the big title companies, like Stewart. Get a competent inspector and have a complete inspection performed. Look at the surrounding area and see if there are issues with the neighborhood that would indicate declining value. Determine if the price and condition considered together make a good value.Thanks, Greg Lacy
0 votes Thank Flag Link Wed Feb 9, 2011
I agree with Landon below. It's purchased AS-IS but treat it is a resale with CYA buyer notices, inspections, including pest and termite, and get the survey. It doesn't hurt to ask for a repair. One bank paid and repaired a major plumbing issue after our inspection. Good luck!
0 votes Thank Flag Link Wed Feb 9, 2011

Things come up when the seller can't close on time. Liens, people on vacation who need to sign, improper notification, improper evictions and the list goes on.

If the buyers need to close on a specific day and cannot be patient for the seller to be ready they should not buy a bank owned property. Guess that could happen with any property, but I find it more often with foreclosures. I guess typically there is not as much pressure on the seller to sell. They have no personal stake.

Of course if the buyer is not ready to close for some reason, they need to understand they might pay a penalty for not closing on time. Sometimes $50-$200 /day. That is also likely out of their control.
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0 votes Thank Flag Link Wed Feb 9, 2011
Bruce Lynn, Real Estate Pro in Coppell, TX
Hi Savannah! First and foremost: the home is typically sold in "as-is" condition. No repairs are allowed by Seller or Buyer. The process is not fast and when you are lucky you close in 30 days. If you have time, take the SFR course (Short Sale and Foreclosure Resource). It can be very helpful in ensuring you know the right questions to ask to help guide your Buyer through purchaisng bank owned property. Please feel free to give me a call or send an email should you have a question.
0 votes Thank Flag Link Wed Feb 9, 2011
It could take considerably longer than a traditional purchase. That is not guaranteed but it is something to be prepared for.
0 votes Thank Flag Link Wed Feb 9, 2011
Biggest differences are that it takes longer to get processed (getting a reply to your offer, working through repair issues, etc) and the fact you might be up against other offers bidding for the same home.

The banks agent will not tell you how your offer looks or what to do to make your offer better. So don't drag your feet...make your best and final offer first! The buyer's Realtor will let you know how to proceed and don't forget that all important pre-approval letter from your lender or proof of funds for a cash transaction.

Good luck!

Mark McNitt
Bernstein Realty
m 832-567-4357
0 votes Thank Flag Link Wed Feb 9, 2011
I agree that you should prepare them for a little bit longer time to close than normal. It's nowhere near as bad as short sales, but Foreclosures can take about 2 months. Some banks are quicker, some are slower, but I'd say that's around the average unless it's a cash deal. I also agree to ask for a home warranty.
0 votes Thank Flag Link Wed Feb 9, 2011
Have a pre approval letter for finanacing, or proof of funds for a cash sale, in hand!
0 votes Thank Flag Link Wed Feb 9, 2011
I have done lots of foreclosures and despite what many people say, the banks are very cooperative. Just recommend some really great inspectors that you know will do a thorough job. Of course there are the usual things like possibly no remotes for the garage etc. but they are easily fixed. Termite inspection is also very important. Sometimes the banks will even treat for the termites. All my foreclosure deals have gone very smoothly. Short sales are a different story......

Rosemarie Furnari
Realty Associates
Pearland, TX 77584
0 votes Thank Flag Link Wed Feb 9, 2011
I would just make them understand that the process is not a fast process. Usually if they know up front that it will take a long time, they are more willing to be patient. Also, make sure that the bank purchases the buyers a home warranty.

0 votes Thank Flag Link Wed Feb 9, 2011
In my experience it has been the same as buying from a home owner. Wish I had more words of wisdom for you.
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0 votes Thank Flag Link Wed Feb 9, 2011
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