Vanessa Barnes

Bank Owned and Short Sales - What it Means?

With bank owned properties:

1. In some circumstances you may be competing with multiple offers. You will always want to present your highest and best offer to START as you may not get a second chance.
2. Although the bank may agree to your offer, until the bank signs off on all the paperwork you are still at risk for someone else submitting another bid and the bank accepting it. I have been fortunate so far this has not happened to any of my buyers but I have spoken with other agents where their customer has lost their bid.
3. Once the offer is accepted, the bank will present an addendum they will require your signature on as well.
4. Title issues – allowing time to clear these up. I had a situation recently where a customer was buying a bank owned and the title did not come back clear. The buyer waited 45 days for the bank to clear the title so the buyer could purchase the property.
5. The good news here is if you can work through the process you can get a great deal!!
6. Another concern with bank owned that we have to be aware of is the time frame the bank has owned the property. With FHA financing your lender can only secure the loan if the bank has owned for 90+ days. We will need to watch that carefully. Does not apply for USDA.

With Short Sale Properties:

1. The process for short sales can take anywhere from 1 to 6 months (or longer). Short sales require a lot of patience.
2. The seller’s lender determines whether or not the terms of the offer are accepted. You could wait months and the offer not be accepted by the bank.
3. Some challenges I am seeing: (1) The bank approves the price/terms BUT asks the seller to sign either a promissory note or to bring money to the closing table. If the seller does not agree to either, then the deal can end at that moment, and (2) If Foreclosure proceedings have started and the short sale is not completed in time, the bank may foreclose on the property while you are waiting for the short sale to be completed.
4. The good news on short sales, if you can wait for an answer from the bank and the bank accepts the offer, often times you can get a good deal on a property.