If you’re a buyer who has purchased before, or if you’ve sold a home, or if you’re getting advice from your office mate who just bought a home through a standard sale, your experience purchasing a bank owned home may be very different from what you might expect.
First off, know that EVERY real estate transaction is different AND every bank is different in what they demand, will negotiate, in paperwork they need, etc. Below are some other tips and heads up:
- MOST banks will have you sign their own Addendum. Each bank’s addendum is different. READ THIS ADDENDUM CAREFULLY. It outlines the bank’s terms, will contain verbiage in which they basically waive any responsibility for the condition of the home and may include information as to what they will and will not pay. This addendum may prevail over the State Purchase Contract should there be any discrepancies/differences of terms between the two. It may be prudent to see if the listing agent can provide a copy of the bank’s addendum BEFORE submitting your offer.
- MANY banks (especially a Fannie Mae owned home) will NOT do any repairs. Assume they won’t. This doesn’t mean you can’t request those repairs once you’ve done your inspection. Just don’t expect they’ll do those repairs. Generally when a banks says “sold as is”, they really mean it.
- CLOSING costs on a bank owned home may be higher for the buyer as the bank may not pay certain items that are typically paid by the seller (in your area). Many banks won’t pay Real Estate transfer fees, the cost for local/state required reports or the cost to bring any items into compliance with any state/local statutes, termite report. They may not pay to obtain HOA documents on a condo/townhome.
- MOST banks will demand a shorter inspection period. Expect it to be 10 days.
- When submitting an offer, EXPECT the bank to make you wait and wait for a response and then when they do respond they demand a response from you in a very short period of time.
- Do as much due diligence as possible while the offer is being considered. If possible, don’t wait for the results of the physical inspection to bring in other appropriate professionals. Take a good look at the house. Does it appear you might want a roof inspector? Foundation? What about the main line (sewer line house to street). If so, and your offer is accepted, you should schedule all of these inspections as early as possible.
- KEEP IN MIND that the bank NEVER lived in this home and has no information as to the history of the home nor are they obligated in any way to provide you this information.
The above is a guideline. Again every situation, every bank is different. Embarking on the process with realistic expectations helps reduce possible stress, frustration and disappointment.