Candid talk of Foreclosures and Bank Owned properties ( First Time Buyers must read)

Fact: Bank owned properties are difficult to finance due to your loan companies requirement of Title 5 Certification ( septic passing). When you pursue a bank owned house, you, the buyer are responsible for the title 5 inspection, de-winterization costs for home inspection, and other requirements that your lender will want. In other words, bank owned properties are sold as is, and all buyer lenders will not allow for a failed septic system.  You could spend upwards of $1000.00 of your money prior to owning the house.  Very rare will the bank that owns the house allow for contingencies like these.

Fact: Bank owned properties are difficult to finance due to your loan companies requirement of Title 5 Certification ( septic passing). When you pursue a bank owned house, you, the buyer are responsible for the title 5 inspection, de-winterization costs for home inspection, and other requirements that your lender will want. In other words, bank owned properties are sold as is, and all buyer lenders will not allow for a failed septic system.  You could spend upwards of $1000.00 of your money prior to owning the house.  This is very risky for you! If you buy a property that has town water and town sewer, your risk is less!

MOST rural properties  are on septic and well.

 

If you decide to pursue a rehab loan for a bank owned property the costs will have to be determined by licensed contractors and paperwork must be submitted to your lender.  This could take a little longer to obtain.

 

Title problems:  The big news today is that banks are not foreclosing properly. They are accused of creating potential law suits from previous home owners. Some homes are not insurable. To make a long story short, title insurance companies are reluctant to insure some of them, hence, you cannot obtain a loan for a property where you cannot obtain title insurance.  John Hogan can give you more information regarding this.

  

Short sales- they take a long time to close..STILL!  A short sale is done when a seller needs, has a financial hardship, and has to sell for less than what they owe and MUST be approved by the sellers bank.Short sales are a risk. Most listing agents list short sales at what they believe is market value.  The entire process takes up to 3 months for you to receive an answer from the seller's bank.

The process: You submit a full Purchase and Sales agreement to the bank, the seller has to  approve first, once the seller and you sign the agreement, it is then submitted to the seller's bank.  The sellers bank will send out an appraiser. The appraisal is then submitted to the seller's bank's investor, the Investor and the  seller's bank usually counter offers based on the Appraisal being higher than the sales price listed on the contract..many  times the counter offer is  higher than what the list price indicates.  This delays the process even longer.

I am a certified distressed property expert and signifgant experience with this type of transaction.F

Further with a short sale, the seller does not have the money to invest in title 5 inspection or any other fixes that YOUR lender would require. Like foreclosures, the onus would be upon the buyer. There are exceptions, few and far between.

This can be overwhelming especially for a first time home buyer.If you buy a property that has town water and town sewer, your risk isn't as great on the septic system/well issues.

MOST rural properties  are on septic and well.

 If you decide to pursue a rehab loan for a bank owned property the costs will have to be determined by licensed contractors and paperwork must be submitted to your lender.  This could take a little longer to obtain.

 

Title problems:  The big news today is that banks are not foreclosing properly. They created potential law suits from previous home owners. Some homes are not insurable. To make a long story short, title insurance companies are reluctant to insure some of them, hence, you cannot obtain a loan for a property where you cannot obtain title insurance.  John Hogan can give you more information regarding this.

  

Short sales- they can still still take long time to close..STILL!  A short sale is done when a seller needs, has a financial hardship, and has to sell for less than what they owe and MUST be approved by the sellers bank.Short sales are a risk. Some listing agents list short sales at what they believe is market value.  The entire process can take as long as  3 months for you to receive an answer from the seller's bank.

The process: You submit a full Purchase and Sales agreement to the bank, the seller has to  approve first, once the seller and you sign the agreement, it is then submitted to the seller's bank.  The sellers bank will send out an appraiser. The appraisal is then submitted to the seller's bank's investor, the Investor and the  seller's bank usually counter offer,many  times the counter offer is  higher than what the list price indicates.  This delays the process even longer.

Further with a short sale, the seller does not have the money to invest in title 5 inspection or any other fixes that YOUR lender would require.

IMPORTANT: You can solve many of these issues by using a top notch buyers agent who will educate you, enlist the help of an attorney, and inform you of any potential pitfalls upfront. Saving you, the buyer time and money and/or future problems.

I am sure other professionals can add to this. Please keep in mind, the statements and claims made above are generalizations.. There are exceptions, just not many.

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Lori Lincoln
Keller Williams Realty- Taunton area
http://findsouthcoasthomes.com
lorilincoln@kw.com
508-878-0917
 

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Comment balloon 2 commentsLori Lincoln Team • February 23 2011 11:43AM
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