Buyers, you can get a great deal on a bank owned property, however here are a few facts you may not know. Here’s what made my list from professional experiences.
- This sale is not an extremely personal transaction.
- You will be on the bank’s timeline.
- You may need to sign documents multiple times.
- This sale will take more time than a traditional real estate transaction.
- Market value is what someone is willing to pay for the property.
- You may be in competition with other buyers.
- Your dream can be a reality.
When you’re dealing with a bank owned property, the transaction is more of a business type transaction rather than a personal deal. If you have purchased a home before, you will probably not have the same experience you had when purchasing a traditional sale property. In most situations, the bank will treat you and all involved as a business transaction, not a person. This is not always a bad thing, but from my experience my clients have felt a bit neglected and impersonalized by the way the deal has to be completed. This leads to the discussion of timeline.
The seller or bank will usually provide all timelines for the transaction, from timelines of getting documents signed back for contingency to inspections, all the way to the closing date. This is fact that you as the buyer will not be able to do much about. Your lawyer may be able to extend or change some dates, however the dates will need to be kept in mind at all times or contracts can be nullified.
Another aspect of a bank owned sale is the need to sign documents multiple times or different documents all together. In my experience, the bank may have a completely different contract for you as the buyer to complete and sign, prior to the acceptance of a contract. I recommend you to have your lawyer review the contract and add amendments as necessary to ensure you have all the necessary items in your contract. Some of these items from the original real estate contract may be: mortgage contingency, lawyer review period, personal property inclusions, “as-is” statements, etc.
This is a very important step not to miss to ensure you as a buyer are protected in a foreclosure sale. Because of this document process and the non-personal, business transaction approach, your sale may take longer than a traditional sale.
The overall timeline:
The timeline of a foreclosure could depend on multiple factors; how long for documents to be transferred back and forth between buyer and seller, if there are additional bids by others on the property, how long the bank takes to accept the contract, if additional contracts or amendments are required, how long the contingency periods are listed for in the contract, when the inspection and appraisal are completed, and also when the closing date is agreed upon.
Market Value & Competition:
What are you willing to pay for the home? What is someone else willing to pay for the home? I pull the comparable properties in the area for my clients to determine the price point. However, market value in the end is what individuals are willing to pay for the property. Many people looking for a great deal in a foreclosure home think they will be able to “low ball” the bank to get an even better deal. I am here to tell you, this is just not happening so much anymore. The bank and their listing agent are also looking at the comparable properties; therefore they know the approximate “magic number” that will sell the home at close to market value. This is where some of the multiple offer situations come into the scenario. Banks are pricing very close to what you are willing to pay and what someone else is also willing to pay.
Your dream can be a reality:
There are many moving parts to a foreclosure sale, but do not let this detour you from getting a great deal. If you choose an experienced agent, a great inspector, and the right lawyer it should all come together in the end and you will get your dream home and at a great price.