Many buyers want to buy a banked owned home. They think it will get them a great deal by getting more for your money. Many don’t consider the additional costs and requirments beyong a “typical” purchase that are usually involved in a bank owned purchase.
Submitting an offer:
After you submit an offer, the bank may take longer than the typical seller to respond. Some will get back with an answer in a couple of days, while others may take a week or more. The delay is usually due to the internal review process that a bank needs to go through for an approval of an offer. However, you should get an answer bank fairly faster than a short sale situation, which can take a couple weeks to as long as months. If there are multiple offers involved, you may need to go through a couple counter-offer rounds before a final offer is selected.
Offer acceptance and the addendum:
If your offer is accepted, you can expect to get an addendum to the purchase contract to spell out the bank’s terms and conditions beyond what is stated in the standard contract. One of the main points is usually stressed over again and again, and that’s the purchase is “as is”.
You will get a verbal acceptance usually after the addendum. You need to sign the addendum and then send it back for the bank to sign and finalize the contract. The process can take several days. You are unable to start escrow until the you have the contract and addendum signed by both sides.
Inspections:
When dealing with a bank, you need to play by their rules. A few purchase agreements may state that the buyer must agree to waive all inspections, effectively eliminateing the 10 day inspection period requested with the original offer. In this case, if you have time to return the addendum, you can quickly get an inspector that can work on short notice and perform the inspection before the deadline and sign the special addendum.
Beware of the Penalty Fees
Another common addendum requirement is that you must close on the date agreed upon. If you miss the date, the bank will usually charge a daily fee of around $100 until it closes. You might be able to get the fee waived if the delay is caused by the bank. It’s best to give enough time for closing.
Finally…
Buying a bank owned property can be a great money saver. But aware of what you are buying and the true costs if the home needs work to get it back into an acceptable move-in condition.