Everyone likes to get a good deal, including me. In today’s market, some of the best deals to be had are owned by the banks.
Some of these properties sell for half of what they did prior, but you need to understand just how the process works. Banks, just like any seller, want as much as they can get for their home. An agent who doesn’t know the market can give poor advice to the bank and over-value the property by thousands. In the end the market will set the price, and banks do not want to hold on to these properties. They will be the first to reduce their price. Usually after 90 days on the market, they are very motivated to move the home.
The process of foreclosure can take years. Usually the property sets vacant at least part of that time. With Iowa’s cold winters, broken water lines can be expected. The only thing the bank will guarantee you is clean title; everything else can be broken.
To complicate things further, most banks don’t want to finance homes with problems. Even small deals like chipping or peeling paint can cause a sale to fall through. The best deals will have problems and need to sell for cash. Prior to making an offer, you will either need a letter from the lender saying they will make you the loan or proof you have the cash to close.
Time is of the essence, and most banks will charge a per diem. This means if you don’t close on the day the bank has chosen, they will charge you for each day you are late, usually $50 to $100.
The best advice I could give if you decide to purchase a bank-owned home is start with an experienced real estate agent who is knowledgeable in the market your looking in.
Another common problem is mold. As the home sets vacant and is closed up with no utilities on for a long period of time, mold can occur. If there is a basement and no electricity, the sump pump doesn’t run. You end up with water in a warm basement during the summer, and it becomes a breeding ground for mold. This is not the end of the world, and it can be fixed, but most banks don’t want to spend the money. It becomes the buyer’s responsibility and can be very costly. The last property that needed mold remediation had a final cost of about $15,000.
Every market is different. Choosing the correct real estate agent can make the process go smoothly, and you’ll get that great buy.
Information provided by Larry Saemisch, RE/MAX Pros on Main, 1207 Second St., Perry, 515-465-5000.