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Bank Owned Properties
BUYING BANK OWNED - WHAT TO EXPECT
Everybody knows if you are looking for a good value, buying bank owned is the way to go. What everybody doesn’t know is how stressful buying a bank owned can be...So let us give you a little insight on what is required and what you can expect.
Before you go... Day 1
Get Pre-approved - Every bank requires a letter of approval from a reputable Lender or proof of funds (if you are paying cash). Before you go, have your pre-approval or proof of funds available for your Realtor. Some Banks require you to get pre-approved through them directly or their preferred Lender prior to reviewing your offer. Have your Realtor ask if there are any special pre-approval requirements before you make your offer.
Get Availability - Our Department is in receipt of 10 to 30 offers per day. Availability of properties can literally change by the minute. To reduce wasted efforts, have your Realtor check availability prior to viewing the homes and/or making offers.
Get Real - Bank Owned properties are usually listed below market value in order for them to move quickly. Look for homes within your price range or slightly (10% max) over that range. The Banks are restricted by sale price approval guidelines that correlate directly to the list price. If you think the price is way too high, you are better off moving on to another home or waiting until we get a price reduction (typically reviewed every 30 days)
You are ready to make an offer...Day 3
As-Is - Your Realtor will write up an offer on either an As-Is contract or a Sales Contract including an as-is addendum. As-Is means that the Seller has never lived in the home, typically has no reports regarding the condition of the property or its contents - therefore, the Seller has no knowledge of any current or pre-existing issues with the property. When buying Bank Owned, You rely solely on your inspections to decide if you will proceed with the purchase. Typical inspection period is 5-10 days.
Title and Escrow - Banks use foreclosure attorneys and large title companies to issue title policies and handle closings. Most of these companies are from out of town and are assigned upon contract acceptance. Banks typically require 3-10% earnest money to secure the contract. This money can be made upon acceptance on your initial contract.
Timelines/Negotiations - Once Your offer is submitted, You should receive a response within 24-72 hours if there are no other offers. All offers are submitted and received electronically by email or into a website in the order they are received. Technology helps streamline the process. The Seller will not initial changes to the contract during negotiations.
Multiple Offers - Should be a four letter word, but very common today. There are many Buyers fighting for the same good deals, so there is a good chance You will end up in a multiple offer situation . The Seller almost always go back to all parties requesting highest and best. You will be asked to give your highest, best and Final offer. The Seller will then choose the best offer. There is no chance to go back once highest and best has been submitted, so it is important to give it your best shot. That way there are no regrets.
My offer was accepted...Day 10
Final Approval - Be aware that Your offer may be accepted pending Final Approval. This process can take 24 hours up to 2 weeks. Although You will not be penalized if the approval period delays closing, there is a possibility that your offer will receive Final Approval. Other offers received during this time will be held as back up offers.
Addendums - Once the offer is fully approved, You will receive Bank Addendums to complete. Before the Seller executes the contract, the Bank Addendums must be returned with the Florida Contract, Proof of Financing or Funds and the Proof of escrow. Once the complete package has been sent to the Seller, you should receive the Executed Contract within 1-5 business days.
Escrow - The title companies and law firms that Banks use to issue policies usually require the escrow deposit in the form of a wire transfer or a cashiers check. Ask Your Realtor to obtain a disclosure of closing fees to the Buyer. Many of the larger closing companies charge higher than normal closing fees. It is best to address this in the very beginning than the day before or day of closing.
Contingencies- We recommend starting inspection time from the day you receive the addendums. Contingencies are measured in calendar days. If You are using financing, make sure you are clear date your finance contingency will expire. If you cannot obtain a finance commitment and don’t notify the Seller in writing within the specified time limit, the Seller will retain the earnest money.
Title Issues - There is a possibility that you will be faced with some type of title issue before you get to closing. Some of the issues are simple - Certificate of Title Recordings, judgment hearing, etc. Others can be very complex - for example, re-foreclosure (which can take up to 6 mos.). Depending on the time needed to cure the issue, the Seller may decide to cancel the contract, return earnest money to Buyer and withdraw from the market until the issue is resolved.
We are closing... Day 45
Location - Although the Seller’s title co. may be located in Ft Lauderdale or Tampa, your closing can be held pretty much anywhere you would like. Most of the tile companies will provide you with a courtesy closer. A small percentage of the title companies will expect you to pay for the mobile closer. This can be addressed when you request the fee disclosure upon acceptance of the offer. Typical mobile notary costs $150.
Title Policy- At closing you will receive a preliminary title commitment with a list of exceptions that will be removed once the actual policy is issued. Your original policy will be mailed to you at the address you specify. Although this process has become quicker as title companies become more efficient, it may be 1-3 mos. Before you receive Your policy in the mail.
Funding/Keys - Before you sign, you will be provided with a closing statement - breaking down all the fees and balance to bring to closing. More and more title companies are requesting that the final figure be received in the form of a wire transfer to prevent fraud. Wire transfers can decrease the funding time. Your Realtor is not authorized to release keys until funding. A wire transfer is most secure and will allow you to move in quicker.