SELLING BANK OWNED HOMES - THE 1ST BATTLE

I always get asked "What is the biggest obstacle you face selling bank owned homes?". Unfortanately they are not obstacles, but true throwdown battles in most cases. I have created this blog as part of a new informative series of what obstacles buyers and agents face in this new world of REO (Real Estate Owned) homes.

A bank owned home is a fantastic opportunity for a buyer to purchase a home at an incredible price, it's title has been cleared, the property cleaned and readied for sale. I will use this forum to address different issues from the agents point of view, buyer agents point of view and how a buyer looks at this strange new world.

Today i want to discusss a growing problem. It is with the utilities of a bank owned home. In most cases the bank will not pay to turn on any utilities, either the agent or the buyer has to turn on and pay for the utilities. The problem begins with a buyer who wants to get a mortgage and they need to turn on the utilities to show the appraiser they work and have no leaks or problems.

The largest problems start with Public water utilities. Often times the former owner had not paid their water bill for the prior 6 months to a year. the charges can be several hundred dollars. The problem starts when the water works disconnects the meter or shuts the water off in the street.

In the past the water works would allow the water to be turned on upon receiving the hud (the settlement sheet) showing they were being paid  at closing. This would allow the water to be turned on, allow the appraiser to make his inspection, allow the property to get final approval and the closing to take place.

You see the bank will reimburse the agent only with approved items, that payment however would take 2-3 months after closing to arrive if they even approve it. Most banks prefer to pay it on the hud. Some even mandate it, like with the banks that own the houses here in NH . The Manchester NH waterworks is now mandating the bill be paid before closing, against what the banks policy is. Most buyers dont have the extra money to pay it and if the agent pays it they wont be reimbursed, with a small commission margin already, utility bills can take away 3-4 months of work for an agent involved in the sale of this property. The waterworks around here is stating "they have been stuck with unpaid bills" which is not the truth as they would not turn on or leave on water if it wasnt paid, they would simply turn it off and eventually soemone would need water to live so it would have to be paid to be turned on. So they get their money for their bill, plus their fees plus their turn on and turn off charges, late fees and other fees they dream up.

Because of the water works inability to work with home buyers and agents, sales are falling through, buyers are losing deposits and houses remain vacant. The polticians, water works employees and the water works department heads need to adjust their actions to work with agents who are filling these vacant houses up with people, most who are new to our area who are going to live here, work here and support our economy. instead they are driving away buyers.

If there is a specific issue with utilities you face as an agent, please share it here.