I just received an interesting email from another Realtor's buyer - a complete stranger - through my website.  This buyer purchased a bank-owned home using VA financing and the bank to agreed to pay for Section 1 repairs.  That's the good news.  This buyer is having second thoughts because there are other "equivalent" homes available in the same market for less money.  He wrote to ask my opinion.

Let me preface my response with the following information:  I am located in Contra Costa county (northern California) and VA financing hasn't been used in this market for close to 10 years.  So the fact that his realtor got a bank to accept $0 down VA financing AND pay for Section 1 repairs says that this buyer should genuflect at his realtor's feet for accomplishing a minor miracle.

From a buyer's perspective, I totally understand his concern.  Did he pay too much?  When he pops in on the internet and views "equivalent" homes (in bedroom/bathroom count and square footage) that are significantly less expensive, you really can't blame the guy for worrying that he paid too much and seeking an independent opinion.

So, for all buyers with the same concerns, here is my answer:  the PRICE of bank-owned homes is typically related to the CONDITION of bank owned homes when the homes are located within the same market area.  Banks prefer to sell the home As-Is which means YOU pay for any repairs after you own the home.  The more repairs that are required, the lower the price.  It is a rare bank that will agree to ANY repairs prior to closing.  Many bank-owned homes need repairs that are structural and should be repaired immediately or risk further damage to the property.  Upon reviewing the property inspections, it is VERY IMPORTANT for buyers to honestly assess whether they have the cash to immediately complete the repairs after they purchase the home OR consider buying a higher priced home that is in better conditon.