Banks now own more than 45% of the homes on the market in many areas of the nation through Foreclosure and Short Sale status.  This has affected the buyer's ordinary rights in purchasing a home, and will have significant long-term effects. Important consumer protection rights which are being eroded or lost in a market situation controlled by Banks through REOs and Short Sales include:

 1.  Buyer loses the ability to set a firm closing date.

2.  Buyer cannot choose the escrow company.

3.  Buyer cannot state a time frame to receive an answer from the bank (ordinarily 1-4 days for seller to respond to an offer; banks take months to return a signed contract).

4.  Buyer gets a ‘verbal acceptance' rather than a signed contract.  Some only sign the contract at COE.

5.  Buyer must sign addendums giving up the right to basic warranties on mechanical functions of the home and appliances.

6.  Buyer must receive the home in ‘As-Is' condition - in a normal real estate market this means as it is on the date of the offer; for REOs it means as it is on the date of closing.  If vandals move in and destroy it between the date of the offer and COE, the bank holds itself under no obligation to return it to the state it was in at the time of offer.

7.  Banks have electricity and water turned off, even on ‘Open House' days, so the unsuspecting buyer will not know if there are major leaks or problems with electrical systems without spending $300-$500 for a professional inspection.

8.  Since the water is off, the landscape will die in drier climates, further degrading the value of the property over the 3-6 months the banks take to close the deal.

9.  Swimming pools left without maintenance are the cause of further value loss as a great deal of money must be spent to bring it back into service.  Furthermore, they become mosquito breeding grounds for the neighbors.

10. Vacant homes are easily vandalized.  The protracted wait period makes vandalism easier and more likely, further degrading the home's value.

 With the market so skewed against consumer protection, why are we surprised that buyers are non-existent?  Wise buyers would do well to stay out of this Russian-roulette market; wise sellers (read: Banks) should allow consumer protections to remain in the contract to lure smart buyers back into the market.