Buying a bank-owned property is a little different than buying an “arms length” 
type property. One of the major differences is that there is no emotion involved with the banks.It is strictly numbers, and rules. Most banks want the property sold and off their books in120 days or less.
Most bank owned properties are vacant so they are easy to look at, but many of them don’t have power so you need to make arrangements to get there during daylight hours. There is a coded lockbox on the property, but this is for the banks and the property preservation companies to have access. You should contact a Realtor to set up a time to see the property and not try to go in on your own.
Most banks will not accept contingency contracts. If you have a property to sell to qualify for your finanacing, and it is not disclosed, the bank will consider this fraud and will cancel the contract and keep your deposit.
ALL bank owned properties are sold “as is” with all their faults. There may be some instances that the bank will do some repairs prior to closing, but it is rare. If work is to be done, then in most cases, it will be completed prior to marketing. There are no Sellers Property Disclosures. In most cases, the seller/bank has never seen the property or physically visited the property. The Buyer will have the right to inspect the property. The inspection time is usually 7-10 days from the date of the fully executed contract. Getting the signed contract back from the bank can take anywhere from 24 hours to 5-6 days.
Banks do not usually want to finance their bank-owned properties; however there are a couple of exceptions to this. BB & T now offers special financing on their bank-owned properties, and Wells Fargo and Bank of America require a pre-qualification from one of their lending officers to be submitted with the contract. The Buyer is not required to get their financing with either Wells Fargo or Bank of America, but they want the opportunity to offer the Buyer financing.
Most banks have their own special addendums. Some banks have a standard addendum that they want with the contract package and others negotiate the contract and then generate the addendum that are specific to the contract. THERE ARE NO CHANGES ALLOWED ON THE ADDENDUMS. If the Buyer wants to make changes, then they will not get the property. It is important that you understand the addendum before signing it.
The Buyers are not to have access to the property prior to closing. This is a liability issue for both the Real Estate Agent and the Brokerage Office. Buyers are not to be in the property without their Real Estate Agent present. Under no circumstances should the Buyers be given lockbox codes to access the property at will.
Most Bank Owned Property closings are “dry” closings for the Real Estate Agent. The banks have their own title company that they retain to take care of the closings and these title companies are usually out of town. The good thing about this is that they pay the Buyers’ owners title insurance. The Buyer is responsible for the work fees and the mortgagee’s policy (if they are getting a mortgage). The title company sends a mobile notary to a designated location that is mutually agreed upon, and they are responsible for getting the closing documents and funds back to the title company. The commission checks for the Real Estate Agents are cut and and mailed once the title company receives all of the closing documents, and this usually takes anywhere from 2 days to a week.
If you want to purchase a foreclosure, it is helpful to understand how the process works. Bank owned properties can be a great buy, but you the Buyer, have to be willing to deal with any and all repairs and play by the bank’s rules to get that property.
Information provided courtesy of Cindy Crona-Hudson, Keller Williams Town & Country Realty
