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Buying a Foreclosure (bank owned) in Clark County, Washington

By
Real Estate Agent with Keller Williams Realty

I get questions all the time about buying  foreclosures here in Clark County and thought it might be a good idea to address them here.  There are a lot of missunderstandings about what they are and how easy it is to purchase them.  I hope this information allows for some clarification.

What's the difference between a foreclosure (bank owned home) and a short sale?

A short sale is a home owned by an individual where they owe more than the home can sell for.  In that case they may only sell with the short sale bank's approval to lose money.  It usually take 45-60 days to get an answer from the bank to do that.  Sometimes they agree.  Sometimes they don't. 

A foreclosure is a home that has been foreclosed on and the bank already has taken ownership.  The response time for a foreclosure is usually 2-3 days and the list price is an amount that you know the bank will accept.  Foreclosures are usually priced well because the bank wants to get the home off their books and get it sold as quick as possible.

How do I find a cheap foreclosure to buy?

A few agents specialize in foreclosures and it is important to find a good one to represent you.  Because they typically sell fast, it is important to be one of the first people to be aware of the newly available foreclosure homes.  There are also HUD foreclosures that require you to make your offer online.  You need an agent to bid and because they have a lot of specific rules it is important to hire a realtor that has experience with these.

What are the disadvantages of a foreclosure?

Though the bank owned homes can be a good value, the foreclosure bank seldom will do any repairs.  The home is sold "as is."  That means you need to have someone advise you who has a keen eye for potential problems.  Though you will still get an inspection, you try to avoid that cost if you can spot the issues ahead of time.  Either way, when you find a problem, it is very rare that the bank will negotiate with you to fix it.

What do I do if the foreclosure (bank owned home) that I like needs some repairs?

Because people that are getting forclosed on are often very frustrated, it is not unsusual that they have done some damage to the home before they leave.  Sometimes there are missing items such as appliances, fixtures or doors.  There are 2 strategies in dealing with this: 

1) If you can structure your offer such that you haven't used all your cash to purchase the home, you will have enough money after closing to pay for the repairs.  It is a myth that there are no zero down loans available anymore in the Vancouver/Clark County Washington market.  If you have the right realtor, he/she will direct you to this financing option.  That way you can reserve your cash to do the repairs.   

2) There are loans available that reserve aside in escrow the repair dollars needed.  The bank just rolls those funds into your loan.  If the price you pay for the home plus the cost of the repairs is an amount that is still a good value, you buy the house. 

Most buyers don't know how to effectively implement these fix-up strategies.  Therefore, you have less competition and can get a better buy if you are willing to deal with a foreclosure (bank owned home) that needs some work.

What are some of the tricks that will help me beat out the competition with my bid on a foreclosure or bank owned home?

There is a lot to the negotiation process with one of these homes.  You would probably not use the same agent that might normally be referred to you by your friend.  This is a real specialty and the knowledge only comes through experience.  You need to make sure you deal with someone who has done this many times before.  Since there are often multiple offers, it is very important to position yourself correctly.  Some of the tricks include the verbage of the pre-approval letter, the words you use to alter the inspection addendum, the amount of the earnest money, time frames on certain trigger events, gross vs. net pricing, the timing of presenting the offer, as well as other little things that make the difference between making an offer and getting your offer accepted on a foreclosure.

I first got my real estate license in 1978 and have seen many changes through the years.  If you are in the market to buy a home, whether you are a first time buyer or an experienced buyer, today's market offers you some fantastic deals.  I am usually in the top 2% of all realtors in Vancouver, Washington and have a full time negotiator on my team that only deals with short sale banks and homes that are foreclosures (bank owned homes).  Through experience I have learned several strategies that work.  If you have more questions, feel free to contact me and I can offer the appropriate strategy for you to employ.

                WHEN YOU NEED A GREAT REALTOR....

                                                                              WHAT ABOUT BOB???

Bob Bloom, Partner

Keller Williams in Vancouver, WA

360-607-5829

Vancouverbob@aol.com