When banks have already foreclosed on the properties and placed them for sale, they are typically called bank owned or REOs. REOS are usually listed thru a designated real estate agent and the MLS, so you can go thru your agent to make bids on these listings. Buying REOs still provides for some risk to the buyer. While you will probably write your offer on a standard purchase contract form, the banks almost always counter back with their own addendums that change a good portion of the contract terms. They typically do not allow any changes to their counteroffers -- accept their terms or move on to another property. I always recommend to buyers that they should have a real estate attorney look over the bank's terms and make sure they understand those terms before signing. REOs are typically sold "as is." You can have inspections of the property but the bank will not make repairs. You will be required to provide proof of funds up front, when submitting your offer.
You as a buyer should not assume that title to the REO property will be "clean" once the property has passed through foreclosure. While it is true that a foreclosure sale will wipe out subordinate liens and the bulk of any problems caused by former owners of the property, it may not extinguish liens of ad valorem taxes or problems that may have been missed when the previous owner bought the property. Banks typically transfer the properties to buyers through a special warranty deed, which limits their liability. They will give you an insurable title but not necessarily a marketable title - there is a difference. It's in your best interest to have your own real estate attorney review the title work before closing.
Condition of the property is often an issue with REOs. Lack of utilities and maintenance do eventually take a toll on homes. Some banks have asset management companies come in and "freshen" up the properties, usually with paint and floor coverings and appliances. Other's don't. When buying an REO you will usually get the opportunity to do inspections during the specified time period to determine if you want to go forward with the purchase or cancel.
There's no rule of thumb on what the bank's bottom line is on price. Just as with any other real-estate purchase, you have to look at the recent sales prices of comparable properties, or "comps." You should look at the comps based on current market conditions and write a competitive offer based on that. Sometimes the bank prices the homes really low, and the home will have multiple offers over list price within hours. Sometimes it's priced too high, and you can make a lower offer. Your agent should be able to provide you with comparable sales before you write up an offer on a REO property.
Others have already given you the definition of a short sale. Short sales are typically being sold “as is with right to inspect.” The seller does not have the financial ability to pay for repairs to the property if repair issues are found during your inspection period. For this reason, short sales may not work for buyers that are using VA or FHA financing.
The contract will typically have a short sale addendum attached with terms particular to the short sale. The sale will be contingent on the seller's lien holder(s) approval of the deal, so the contract must be submitted to them after it's executed. How long will it take to hear back from the seller’s lender(s)? It depends on a number of factors. If there’s only one lien holder, it typically takes less than 2 months to get a response. If there are multiple lien holders, it may take up to 6 months or more for all parties to respond. If any one of those lien holders say no to the terms of your contract, the sale cannot be completed.
Short sales can have other expenses as well, such as paying a professional short sale negotiator, back due HOA or condo fees the bank will not absorb.
Find an agent that's experienced in both REO and short sale purchases to guide you thru the process.
The brokerage fee is typically paid by the seller when you complete the transaction with a Buyer Representation Agreement as long as the terms of the agreement are met. It is wise to review and fully understand your and your brokers responsibilities under this agreement. Your agent should explain it completely. If you have any concerns you can reach out to me at 320-253-0354 or Steve.Cash@results.net or visit http://www.SteveCash.net
It's a different market for sure. Strategies, as good as they are, will usually (barring condition, location issues) will get down to pricing and no matter how much advertising done, there's still apx. 67% of the homes that do not sell because of supply and demand.
It's not like you purposely did something 'against' the agent. I agree with some of the other responses about possibly offering something for the time, costs and efforts. There is one thing that many sellers don't know. We spend a tremendous amount of 'behind-the-scenes' time (hours and hours) in everything involved with listing and marketing a home. Sometimes you only see what you think as 'nothing much', but was a lot of work. Contracts, market analysis', research, pictures, marketing brochures, ads, signs, office documentation, internet marketing, updates, verifications and more don't just magically appear from nowhere.... more