What to know when you plan to look for a Bank Owned Home
Compared to buying a Short Sale, purchasing a bank owned home can be easier! There are some things to pay close attention to and be prepared for, but bank owned homes are being disposed of by the bank, they are motivated sellers!
- The first thing that you must do when you consider looking for a bank owned home is to obtain proof of funds if your paying cash or geting a pre-approval from your lender. When you find the home you plan to write an offer on you do not want to delay your ability to write an offer with getting pre-approved. There can often be competition with other buyers on a bank owned property, a delay could allow another buyer to get an offer accepted before your are ready.
- Realize that the banks are listing property as a discounted price with the intent to liquidate the property. This means that they are factoring in the discount within the list price and they will not typically negotiate a large amount, however they do typically build in some negotiating room within their list price.
- Plan for an as-is sale. Banks will rarely fix the property in any way before you close. Plan to view the property, do inspections and purchase it as-is. You will have the opportunity to cancel the contract if you find major problems, but do not plan on the bank repairing any items you find.
- You will have to play by the banks rules. The banks will often choose the title company, specify certain costs that they buyer must pay, and set inspection periods, close dates, and more.
- Plan to have to get pre-approved by the banks specified lender. Some banks will require that you get pre-approved with their lender even though you may be pre-approved with your own lender. This is a requirement and it is just something you may have to do.
- Plan to sign an addendum that is different than the purchase contract. Every bank has their own addendums and contracts with their terms. This is something to read through carefully and if you have concerns to address with a real estate attorney.
- Plan to be more diligent with your inspections. Banks will not provide any Disclosures so you and your inspectors need to pay close attention, maybe moreso than normal, to find signs of past problems that would typically be disclosed.
- Pay attention to the Warranty deed that is offered as well as the title insurance that is being paid for. You should address concerns with the title company to be sure that you have title insurance that will cover all potential problems that you could encounter. You do not want to have a limited insurance that can lead to an encumbered title if something was missed during escrow.
If bank owned properties sounds like something you are willing to look for email me