Bank owned properties... It seems that they are cropping up all over. There are some good deals out there. But, they are a bit different than other properties being offered for sale. These properties are offered in AS IS, where is condition. The utilities are not on. They are sold with no disclosures, or warranties from the bank/seller.
Some are cash only properties. Some won't qualify for any type of financing. A property that has some type of damage; structural, roof, electrical may be advertised as cash only.
Often a buyer gets one shot at getting one of these properties and that's it. His first offer may very well be his only offer. If there is more than one offer; a multiple offer situation, buyers can be asked to present their highest and best offer. OR, the bank will decide to negotiate with just one buyer, if his is the best offer. It depends on what the offers look like, if they came in at the same time, or what the difference was in the purchase prices being offered. The bank or listing real estate company has no obligation to respond to any one specific offer.
Most often these banks have their own contracts and addendums they require the buyer to sign. Be sure to read the fine print.
Sometimes these banks will give the buyer the opportunity to turn the water, gas and electric on, with time to hire professional inspectors. If the inspections are unacceptable to the buyer, then the buyer's escrow deposit will be returned to him. However, not every bank allows the buyer time to get utilities on, nor the time to get professional inspections done. We had a bank this week ask if our buyer would forfeit his right to inspections. This can be a risky proposition... especially with a house that had a half full slimey green pool, a roof caving in from severe water damage, PVC piping running hodge podge along the laundry room walls, an old Federal Pacific electrical panel, and electrical wiring in several rooms that looked like a botched weekend project.
In addition, often bank owned properties come with additional closing costs to the buyer; costs customariliy covered by a seller. Some can run into a couple thousand dollars. Sometimes the costs vary based on the assigned title company or attorney's office that will be handling the closing.
A bank owned property should be purchased with title insurance. (But, properties being sold on the courthouse steps are not being sold with any guarantee on the title of the property. Leave those transactions to the real pros who know the in and outs of bank auctions.) Title insurance insures that the property is being purchased free and clear of any liens or encumbrances. And. if any do turn up, the title company takes care of them.
Buying bank owned properties isn't for everyone. And, every bank and/or listing real estate company is a bit different on how they handle their distressed properties. It's best to do your homework, first. Because, when these properties come on the market, there's typically a flood of activity and they go fast. Often we are seeing that the typical homebuyer is being muscled out by the cash paying investors.
Sandy Shores REALTOR®, Melbourne/Palm Bay FL Real Estate
Brevard County, Florida's Space Coast Real Estate & Investing
I specialize in Residential, Investment & Relocations.
We have a team of professionals that can help facilitate your Short Sale.
I buy, sell, rent, own and manage Investment Property.
that for you
Hi Sandy. You're right that it's not for everyone but to me it makes more sense than trying the short sale purchase.
As always, Buyer Beware.
Hi Sandy,
This is a great information for all of us. Thanks.
Sandy, if you haven't any experience in this type of investment you should probably move on, it can be quite expensive. Great advice for novices and newcomers. Can you get a great buy? Yes, but do the necessary research. Thanks!
Sandy, I know some people make some great finds and prices but it wouldn't be for me. I'd honestly want my home checked from top to bottom....I have a great trust in a good home inspector and would want to know what I may have to deal with.
Hi Sandy, Good advice, homework is a must. Personally, I would not buy a home without an inspection, we bought a HUD foreclosure in the 90's it was a great investment, but with the inspection we were pretty certain about the home going in with our offer.
Sandy, this is very well written and all buyers who are considering buying foreclosures should have second thoughts unless they are experienced in the process. It is only for the strong at heart!!
Excellent advice Sandy. I'd like to add - in the frenzy to find the 'great deal' make sure that it's a home you want to live in!
Richard, There are some really attractive deals available in some of these distressed properties.
Kevin, It's good to always be a bit cautious so you know what you're getting.
Dave, Thanks. Lots of ins and out to bank owned properties.
Kevin, Agreed, you can get some great deals. But, do as much research as you can.
Carole, You're right, it really isn't for everyone. Good that you know already that one of these wouldn't be a good option for you.
Mary, I remember you writing about your HUD home. We also bought a HUD home in the early 1990's. The owners lived in it with no electricity for 9 months, and left their dogs locked inside for weeks. The place was quite a mess, but with my husband being in construction, it looked great in no time.
Caren, Thanks. There are definitely things to be aware of when considering a distressed property.
Gabe, These properties can turn into feeding frenzies for multiple buyers in a bidding situation - great point.
Sandy,
Most I have seen are not worth what they are asking...and the ones that are have 10 to 30 offers already...
Ann
Ann, We have seen many that seem a bit overpriced. I agree - many of them have multiple offers in on them. Often the cash buyers are the ones that are able to secure these properties.