Purchasing a foreclosure (bank owned home) tips & a guideline for Macomb County MI home buyers

Below is a tips & guideline article that I have written for my Macomb County MI home buyers who have inquired about purchasing a foreclosure (bank owned home) in Macomb County.  They have all found it very helpful to read this before we begin looking at the foreclosures.  I hope it helps you also.

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PURCHASING A FORECLOSURE – TIPS AND GUIDELINES

 
Prior to making your offer:

Always consider an offer on a bank owned home to be your “best and last” offer as many of these homes are already bargain priced.  We are seeing many multiple offer situations on these homes. You may only get one chance to bid on them – make it your best offer from the start of the process.    Even if the bank owner comes back with "present your highest and best offer" you will know that you have already done so and I can send the response "It is the highest and best" to the listing agent.

Bank owners and/or asset managers require full proof of funds (if a cash offer) or a pre-approval for mortgage letter with any offers submitted.  If you haven't talked to a mortgage lender yet and submitted the necessary documents for a pre-approval, do it.  The foreclosure owners will not look at an offer without one, or proof that you have the cash in full to pay for the home.

The bank owners also may require a certified or cashiers check payable to the listing office prior to reviewing an offer to purchase.  I will try to get that condition waived,  but for the most part we are unsuccessful in doing so.

Bank sellers will want to see a closing date of no more than 30 days from the date of first offer to purchase. If you experience a delay in your mortgage approval or other reason for delaying the closing you will probably be charged a fee for each day that the closing is postponed.  The bank / asset manager may also withdraw the contract and put the home back on the market.   Sometimes we will even see the verbage "Closing must take place the same month in which offer was accepted" in the contract.  This ma not be possible if you are obtaining a mortgage, and you may elect to not proceed if we see this condition.

After your offer is submitted:

Offers on bank owned homes generally take 3-7 business days to receive a response back from the lender and/or asset manager. A signed acceptance of your offer may take an additional 3-7 business days.  The old adagage "Hurry up and wait" surely speaks in volume for this waiting period from foreclosure owners.

Bank addendums & terms to the contract of sale must be agreed to by the purchaser and signed.  (There are a few exceptions to this, for the most part their terms are inflexible.)   Yes, they can be unreasonable.  Only you can make the determination whether the additional hoops to jump through are acceptable to you.  If they are not, then we'll move on to another home.

Home inspections

If the utilities are not on in the home they will have to be turned on in your name if you desire to have a full inspection on the home.  (A full inspection is always recommended.)   Note:  The gas company will require that you be at the home when the gas is turned on.  I should mention that you will only be given a 45 minute notice from the gas company to be there.   Your home inspector cannot do a thorough job on your inspection unless the utilities are turned on.

Consider your offer to purchase with “As-Is” in mind. Banks/asset managers will normally not make any repairs to the homes.

Inspection contingencies are normally 5-7 days from the date of sellers acceptance. (Rarely do they allow more time.)  You must be ready to proceed with a home inspection quickly in order to meet the deadline.

Closing on your home:

Closing date, time and location are set by the title company hired by the bank owners.  We have very little flexibility, if any, in choosing a time that is preferable by the purchaser.

Many bank owned homes close in “escrow”.  We will arrive at closing, sign all necessary documents and if the bank signed documents have arrived to the title company and funds have been exchanged, then you will receive your keys to the home.

If the bank signed documents have not arrived in time for the closing, you will receive your keys to the home and your closing documents at a later date.  Most often this is within 1-3 business days of closing.

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If you have any further questions about purchasing a bank owned home (foreclosure) in Macomb County MI please don't hesitate to contact me.  No pressure - just conversation.

~Kris Wales~  A Macomb County MI real estate agent & partner for your real estate needs.

 

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