(ok, this doesn't look crowded, but I liked it...)
So I know what you house shoppers are thinking: “Hey, I watch the news and read the papers! Everybody and their brother is losing their homes, and the banks are trying to unload them. I think its time to take the plunge and buy a house”. OK, You’re fine so far…
But it is your next sentence that gets the “BUZZER”: “The banks must be GIVING these places away! I’ll bet I could get a beautiful home that looks like it could be featured in Better Homes and Gardens for HALF PRICE! Honey — get my car keys!”
OK — cool your jets there, friend. Not so fast. If that is your plan, you will be sorely disappointed. Yes, the bank are loaded with houses. But many have not been put on the market yet. Inside sources had said June of ’09 was going to see a flood of bank owned houses hit the market. Here in Columbus, OH we have not seen it…yet. Doesn’t look like there is any way to predict when it will happen.
More important to our subject today, though, is the fact that a) the banks are not “giving away” the nicer homes, b) the homes that the banks are loaded down with, and might be willing to make a deal on are generally in poor condition, and would scare away most normal home shoppers, and c) if it is a “steal”, most likely, you will not be getting it! “What? But I am a great guy/gal! And I have good credit!”
When it comes to selling homes, the bank is most interested in reliable, repeat customers. Here is what one looks like:
1) This person is paying in CASH! As in, no loan, no mortage, take out the checkbook…
2) This person does not need an inspection, a home warranty, or any of the frills that most individual home buyers like.
3) This person has very likely purchased homes in the recent past from the Banks listing agent, or other listing agents that the bank works with, and has a very reliable track record.
4) This person wants to buy this house ASAP. The sooner the better.
Not fair, you say? The bank doesn’t need to be fair. And get this one: THE BANK USUALLY DOESN’T EVEN CHOOSE THE HIGHEST OFFER! Yep, you heard me right. Let’s look at this from the banks’ perspective:
You look at a home at 123 Main Street, that you are interested in purchasing, and the bank happens to be the owner. This house was new 5 years ago, and the original owners paid $200,000 for it. They fell into bad circumstances, and lost the home at the Sheriffs auction. The bank bought the home at the auction, and is now listing it with a Realtor, for $160,000. You put an offer in of $155,000, but of course you need 10 days to have an inspection done on the home (which we always recommend), you will need another 20 days to get your financing in place. Now, and hour after you submit your offer, a real estate investor puts an offer in of $150,000, all cash, no inspection requested, and he or she would be happy to close on this home in two weeks. Oh, and he has also purchased 3 other homes from this same realtor and this same bank in the last year. Now, the representative for the bank that is handling the file on this home (they are called Asset Managers, for those keeping score) probably has 200-400 other files (homes) on their desk that they are needing to get sold. If it is between you and this investor, the investor is more likely to win this one. The bank does not want to wait around for you to get your inspection and financing, and potentially have the deal fall through because either you discovered that it needs more work than you thought, or worse, your financing falls through. Also, if this house is really a good deal, other investors, or other potential buyers might offer MORE than asking price in order to secure the home.
So it pays to be prepared with your facts, know the neighborhoods well that you are looking in, and be willing to go a bit over asking, if the home is really going to be a good deal for you.
Want to read more? The Columbus Dispatch featured an interesting article recently on bidding wars on bank foreclosed homes.
Photo posted via Creative Commons, courtesy of itjournalist
