Things to know when buying lender owned properties
Buying a lender owned property can lead to a great deal
Buying a bank owned property or real estate owned property can be a great investment. Often lender owned properties are priced below market value because of condition.
Patience is key when buying a bank property
After making the initial offer on the property, it may take 2-5 days to hear a verbal acceptance back or rejection. It may take an additional 5-10 days to receive a written acceptance back from the bank. The contract will not be binding until all parties sign the contract.
Banks may use additional addendums, or their own contract in addition to the Arizona Residential Purchase Contract. Please review all additional addenda because the terms of the addendums may alter the terms of the AAR contract. The bank addendums may even remove items that could be of concern to the buyer, such as earnest money being nonrefundable after a certain date.
Still have a home inspection even if the property is to be sold as is
Almost all banks that are selling real estate owned property will not provide seller disclosures and an insurance claims history. It is imperative that a buyer hires a qualified home inspector to perform a home inspection during the 10 day home inspection. Although many banks advertise their properties as is, it still may be worth a try to ask for any major repairs. Some types of loans will not close if certain items are not working. A buyer should also contact their insurance agent during the 10 day inspection period to make sure the property is insurable.
Beware of Liens
One other area of concern is liens. Ask up front if the bank will be paying any unpaid liens at closing. On some short sale transactions buyers have to pay for unpaid liens. Shortly after escrow is opened the title company will send out a preliminary title report. This report will list all liens on the property such as taxes, HOA fees, and mechanics liens. For example: my husband and I bought a bank property in December of 2008 and 3 days prior to our closing the sewer company in Apache Junction placed a lien on the property. Luckily it was caught in time and the bank paid the $600 lien, but it took an additional 10 days to close. It may be important to purchase additional title insurance to cover yourself from any future liens. Please talk to your title company for any additional information.
Do not plan your vacation right on the close of escrow date
Although all parties involved strive to meet the close of escrow date, many unforeseen issues that can arise. On one transaction I did earlier this year the buyer signed the documents at the title company on time but had to wait on the seller (lender) to send the original deed back to the title company. This held up the closing of escrow for 2 days. If one is planning to move from another property, it may be worth paying rent for an additional month to allow for unforseen issues that could delay you move. If one is trying to move across country allow additional time for furniture to arrive.
There are still great deals out there when it comes to buying a home or investment property. Don't hesitate to contact me with any questions. www.dawnbahr.com