Buying Bank Owned Homes - Are They Bad?
Today I received an email from a past client, who is helping her friend house hunt. She asked a great question and one many homebuyers often ask, so I wanted to share with you her question and my answer.
I found this house on your website, thought it was good price and pretty... I just wanted to ask you about the bank owned properties. Are they bad? Do they take longer to close?”
Great question! Let me answer by telling you the pro and cons. Pro: they are priced to sell, the escrow period is usually the same (30 days) as a traditional sale, and they are usually vacant and easy to view. The cons: they are sold 'as is,' so no repairs; the buyer has to sign documents that usually make the buyer feel the bank has all the power. When buying a bank-owned home, the buyer has to agree to all the bank’s terms, or the transaction won't happen. There’s also less flexibility with who pays what for the home. That being said - I love bank owned properties! I've bought two myself. The market dried up most bank-owned properties, so there aren't as many available anymore. So that's what bank-owned means, in a nutshell. I'll check the details on this one to see if it's standard or if there are any non-traditional details, as there sometimes can be.
The ones that ARE a pain for buyers are Short Sales - the reason for this is there is a two-step acceptance process, and the buyer is left hanging for a long time, wondering what's going to happen? Will the offer be approved? Also, the buyer gets stuck paying any extra fees, because the bank won't and the owner won't. Short sales are basically asking the mortgage lender to let the home sell for less than what is owed. The owner is losing the house and ruins their credit, the bank is losing the money the owners borrowed…it can be a real mess. But Oliver and I have also brokered many short sales, so we can help with that too. They’re just harder on the buyer, so I like to give them an idea of the worst-case scenario so they are prepared!
(This response is based on my experiences representing buyers on bank-owned properties and short sales.) Search and offer on all bank owned homes in San Diego here.
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