Traditional Purchases

Most of us have had experience in the traditional purchase of a home. A willing seller lists their home for sale with a realtor. An interested buyer submits a written offer to purchase through their realtor. The offer is accepted, declined or countered usually within 24 to 48 hours and closing generally closes in approximately 30 days but can vary somewhat.

Bank Owned Properties

Bank Owned or Real Estate Owned (REO) properties offer opportunities for buyers to enjoy huge savings. These properties have generally been properties that have been foreclosed on by the bank and may have sat for many months vacant. They are listed for sale on the Multiple Listing Service (MLS) through a realtor. A buyer submits a written offer through their realtor. The offer must be accompanied by a letter of pre-qualification from a lender or in a cash purchase, proof of funds. The offer is accepted, declined or countered usually within 1-4 days. The bank generally expects closing to occur within 30 days with a per day penalty for closing late. Bank Owned properties are almost always sold "as is with the right to inspect". The bank will not repair any defects discovered during the inspection period and depending on the terms of the contract, the buyer may withdraw from the purchase if the repair costs exceed a specified amount. The bank usually insists the buyer uses their title insurance company or attorney to close the transaction and will generally compensate the buyer for a portion of those costs, although they frequently slip in extra fees and expenses for the buyer. Although rarely done, the bank reserves the right to withdraw from the sale right up to the day of closing. The guiding principal is to use caution and do your homework.

Short Sales

Short Sales are also known as pre-foreclosures. They occur when a homeowner is unable to make their mortgage payments and attempts to sell the home before the bank completes the foreclosure, which can take up to a year. They are listed for sale on the Multiple Listing Service (MLS) through a realtor. The listing price is established by the seller and the listing agent without input from the bank. A buyer submits a written offer through their realtor. The offer must be accompanied by a letter of pre-qualification from a lender or in a cash purchase, proof of funds. If the offer is accepted by the seller, it is then forwarded to the bank for their approval. The bank will assign a negotiator and do an appraisal to determine the value of the property. The bank may take anywhere from one week to over six months to respond to the offer which may be accepted, declined, or countered. The banks are overloaded and are being asked to forgive tens to hundreds of thousands of dollars in debt. They must decide between forgiving the debt and selling the property at a loss or foreclosing and taking ownership of the property. The bank generally expects closing to occur within 30 days with a per day penalty for closing late. These properties are almost always sold "as is with the right to inspect". The bank will not repair any defects discovered during the inspection period and depending on the terms of the contract, the buyer may withdraw from the purchase if the repair costs exceed a specified amount. The bank usually insists the buyer uses their title insurance company or attorney to close the transaction and will generally compensate the buyer for a portion of those costs, although they frequently slip in extra fees and expenses for the buyer. Although rarely done, the bank reserves the right to withdraw from the sale right up to the day of closing.