The
facts about buying bank owned properties and foreclosure properties on the
Outer banks.
The laws vary from one state to another and I have some
experience with both
MYTH: You can buy a house for $10 or $1000 or half of the appraised price.
If this was true I would own 100 homes and every lawyer would own a thousand. This is a myth designed to sell real estate purchasing programs on tv. If it ever does happen it is rare and the house is likely a piece of junk and it could have liens on it amounting to thousands of dollars that you will have to pay.
FACT: Banks list their homes for what the current market is selling them for, not what they have in them!
Many bank owned homes were purchased in 2005/6 when the market was at its peak. The subprime loans of the time required little or no down payment and many of these homes are being offered for sale at below what the banks owe on them. Buyers are offering even less and the banks are not eager to loose even more money on the sale – so they drag their feet in hopes that a better offer will come along, and often it does in 90 – 120 days. Most buyers don’t want to wait 120 days just to find out the bank will not accept their low offer so after 30-60 days the buyers withdraw their offers and move on to something else. The banks will wait for a better offer even if it takes a year.
FACT: A short sale is a home that is still owned by the owner but the bank has a say in the sales price because they have made a deal with the seller/owner rather than foreclose on the house. They may still foreclose, but they will attempt the short sale first to see if they can get a buyer. The banks have the power to accept an offer or reject it because they know they are going to loose money, but it is better than going though a foreclosure.
FACT: It can be very frustrating making an offer on a bank owned home or one that is in a short sale position because the banks are in no hurry to decide to sell unless the offer is very very close to full price.
Realtors are reporting that they have to wait 60 – 120 days to get the banks to even look at an offer on a bank owned or short sale. I personally have written 2 offers, one 60 days ago and the other 40 days ago and I have yet to even have the banks look at them and accept or reject them. WHY? Because the banks assume the longer they wait the higher the offered prices will be. Banks are not like you and me, we want to sell and we want to get it over fast. Banks are in no hurry and would rather wait in the hopes of getting a better offer.
MYTH: Banks will accept anything for a sale.
The bank owned homes are listed for sale at, or near, current market prices. These prices are currently ranging from 20-30% below what the house would have sold for 2-3 years ago and this is a significant reduction in price and a good reason to be a buyer now.
FACT: On average the sales price is approx 3-8% below the listed price on bank owned properties – not 20% or 50% off as many falsely believe.
Many people think banks are selling for pennies on the dollar and this is just not true. A house that is listed at $250,000 will likely sell for $240,000 and in some cases it will sell at full price. These bank owned homes can have multiple offers on them because the banks wait and stall in order to get more offers. That same house likely would have sold in 2006 for $315,000 and may again in a few years.
Call or email us today to learn more or get started looking for properties.
Tim Moore
Sales mgr
Broker-in-Charge
Joe Lamb Realty
252-261-7724