Purchasing bank owned properties can be difficult - to say the least. Not only do they want to use their own contract once they accept your offer, but they work at a snail's pace as they move to the closing table. This is exasperating, to say the least!
As I wait for the final HUD and we approach the end of the banking day for the buyer's to wire the funds for tomorrow morning's closing, I wonder how many buyers really have any idea what they are dealing with when they search for bank owned homes.
Granted, they are getting a great deal if and when it closes but situations like this one are nerve wracking. Let me explain the process to those who do not understand.
First, you make an offer. If the property is a great one, there will be several offers. The bank will come back and ask for your highest and best offer. If you are the one that actually has the winning offer, the bank will come back with their very own contract and conditions for you to sign. If you don't sign, you don't get the property. Simple as that! The problem with their contract is that I have had several real estate attorneys tell me that these bank owned contracts are legally questionable. There is often language in there that could be questioned in a courtroom - but again, if you want the property, you sign their contract.
At this point, the buyer has to follow their Realtor's directions and move forward with procuring the loan. The lender will require many papers, just as in any other home loan. Procrastination is not the mode to function in here. The buyer needs to get the paperwork in as soon as possible. I always recommend a home inspection and provide my buyer with a couple of options. Naturally, the buyer can use any home inspector. The inspection needs to be done as soon as possible. In addition to that, the buyer needs to get quotes on homeowners and flood insurance. I normally contact four different companies and get quotes for my client.
While the client is taking care of their end, there are countless other steps taking place in the background. Your Realtor is busy and in constant contact with you, your home inspector, the title company and your lender. This dance is complex and for the most part something the buyer does not need to worry about.
24-48 hours before the closing, the title company should have the preliminary HUD and send a copy to the Realtors involved in the transaction, the lender and the bank that owns the property. Once the lender signs off and agrees to the figures, the bank must sign off. At this point, many banks are processing many closings with a staff that is not large enough to handle the volumn. This means that the buyer may be waiting for final figures to wire funds as the end of the banking day comes close.
The reason it is crucial for the buyer to get the total amount due early is that the funds must be wired and received by the title company before the closing can take place. When the bank procrastinates signing off on the final HUD, the buyer is under the gun to get to the bank before the banking day ends. One way around this pressure is to use the figure in the preliminary HUD and wire that figure to the title company. If the final figure is different, most title companies will take a personal or cashier's check for amounts under $1000 and will cut a refund check if the final HUD is less than the preliminary HUD. For some reason, bank owned properties seem to wait until the final hour to get this HUD approval back to the title company.
Remember, if you are considering a bank owned property, you need a seasoned Realtor who has experience and can guide you each step of the way!
Buying or Selling - - Call Barbara-Jo for all of your real estate needs! - - 727-512-0910
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Barbara-Jo Roberts Berberi, MA
Charles Rutenberg Realty
Serving the Greater Palm Harbor Florida Area, including Crystal Beach, Dunedin & Tarpon Springs Florida
Waterfront condos & homes
Your Real Estate Specialist
If you are thinking of purchasing in the Palm Harbor, Crystal Beach, Safety Harbor, Dunedin, Tarpon Springs area or along our pristine Gulf Beaches, give me a call! With years of experience in the local real estate market, I am here to assist you in making one of the most important purchases of your life! Give me a call today! Find out for yourself why living along the Gulf Coast is indeed living in Paradise!