We have been watching the market closely, and the number of bank owned properties coming on the market in Whittier seems to have decreased. However, there are still many great deals out there to be had - for more information on current Whittier bank owned homes for sale, please feel free to visit our recent blog posts about the Whittier Foreclosure and Short Sales Market: "Whittier Bank Owned Homes", "Whittier Foreclosures and Short Sales", "Whittier Foreclosures" .
Purchasing a bank owned property can be a great deal, many of them are still selling below the price of a "regular sale". However, there are some things you should be aware of when purchasing a bank owned property:
1. Many times, the bank/owner will require you to get pre-approved by a particular lender before submitting an offer. Many of my clients are not too happy about that fact, first of all because they have to provide all their information to another lender yet again, it can take a little bit of time (which can be critical if it is a "hot" property), and they usually already have a lender they can trust. The reason why the bank/owners ask for this second pre-approval is to make 100% sure that the potential buyer is good for the money, they don't want there to be any surprises during the transaction that might lead to a cancellation - after all, they REALLY want to sell. Even though the bank/owner can make it a contractual prerequisit for you to get preapproved by a lender of their choice, they CAN NOT make you use that lender. However, many times those lenders offer great deals that are hard to beat by the lender of your choice.
2. Oftentimes, bank owned homes are in a state of disrepair: months of neglect while going through a failed Short Sales process, intentional destruction by the former home owners, vandalism due to it sitting vacant, or simply general neglect after the time it was vacated. Even though some of these problems are easily fixed, and a handy buyer could take care of most of them, many times there is a problem finding a financing source. FHA loans are a popular choice these days, especially for first-time-buyers, but FHA has strict guidelines on the property condition - even things that seem to be an easy fix can be a huge hurdle (no appliances, items in the bathrooms not working properly, leaks, etc.). HUD, the Department for Housing and Urban Development describes this situation as follows: "The purchase of a house that needs repair is often a catch-22 situation, because the bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased." (quote from the HUD website). Oftentimes the bank/owners will not make any repairs, especially if it is a "hot" property, they just list it accordingly and wait for an all-cash offer. However, there is a recourse - the FHA 203K loan. Not many lenders offer it, but it is available (you can contact us for a list of 203K lenders). The 203K loan is a Rehab loan, taylored to expand the opportunity of homeownership, for a 1 to 4 Family Dwelling that has been completed for at least one year and Condos that are within an FHA approved complex (with additional restrictions for condominiums). For a detailed explaination of eligible properties and other 203K Loan Program details, please visit the HUD website directly.
3. Due to the fact that the bank/owner has never actually lived in the property, the buyer will only get very limited information about the bank owned home. When purchasing a "regular" home, there are many disclosures about the property (such as the Transfer Disclosure Statement, the Supplemental Statutory Disclosure, the Seller Property Questionnaire, etc.) for the buyer to get a sound understanding of the overall condition of the property and any pertaining information. This is typically NOT the case when purchasing a bank owned home and the buyer needs to be aware of this. We urge all our clients to contract a professional property inspector and any other professional that will give them a clear picture of the property condition so that there are no surprises AFTER the sale is completed.
4. Another important aspect is your Title Insurance. Be sure to review the type of insurance the bank/owner is purchasing for you - not all insurances are equal and sometimes the banks/owners will go with the cheapest available which is not necessarily best choice for the home buyer.
5. Take a good look at the Purchase Contract. When making an offer on a bank owned property, your Realtor will use a California Residential Purchase Agreement (a standard form used by the California Association of Realtors, C.A.R.). However, very few banks actually sign those contracts - instead, they will send you back their own purchase contract for you to sign. Realtors are Real Estate Experts, however, we are not Legal Experts, so we urge all our clients who are interested in purchasing a bank owned property to have an attorney review the bank's Purchase Contract to make sure there are no surprises.
Happy House Hunting and be sure to keep this little list handy to avoid any surprises.
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Warm regards,
Stephanie & Shirley
Stephanie Frymyer & Shirley Williams
The S & S Team
"Your Local Property Pros"
562-355-8120 & 310-308-6107
DRE# 01390458 & DRE# 01456658
http://yourlocalpropertypro.com/
Stephanie Frymyer
Realtor, SFR, ABR, SRES
DRE 01390458
Your Whittier Realtor (and surrounding areas)
Shirley Williams
Realtor, SFR, SRES
DRE 01456658
Your West Covina Realtor (and surrounding areas)
Main Street Realtors
DRE 01157065
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