HOW TO BUY BANK OWNED PROPERTIES
August 9th, 2009
One of the hottest segments in the real estate market today is Bank Owned Properties and for the buyer who can view the property and respond quickly with an offer stands the best chance to benefit from the opportunistic buys in the market.
While these homes are purchased in “As Is” condition with a “right to inspect,” the buyer must accompany their offer with either a letter from their bank representative stating they have sufficient funds to purchase the property for cash, or a loan commitment letter showing the buyer has already been approved for a loan. It is important to note that a “loan commitment” is different from a “pre-approval” in the sense that the commitment is predicated on more detailed information.
Since banks what to get these “distressed” properties off their books quickly, they want to make sure the potential buyer is financially sound as they do not want to “wait” for extended periods of time for the buyer to apply and get approved for a loan.
It is also vitally important to have an experienced Realtor work with you as there can be “hidden” expenses that could result in thousands of additional costs to you. Past assessments, outstanding permits, liens, taxes or association fees are just some of the potential costs that you, as the buyer, could be liable for that are not always “obvious” and may require researching to uncover. These potential fees could be significant enough to change a good investment opportunity into a liability.
Keep in mind that purchase agreements or “addendums” submitted by the banks are very “one sided” and are structured solely to protect their interest. While bank owned properties provide excellent investment opportunities, don’t overlook the details, and pay close attention to the all the required documents along with having your finances to purchase the property secured in advance. The more organized you are, the quicker you can respond to these opportunities, giving you an advantage over others who must accumulate the information required to submit along with their purchase offer.
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