Bank Repo:
There are several types of bank repos, but they all have a common element: Someone could not pay his or her mortgage payments. The bank or owner of the secured note then initiates the foreclosure process. In the end, the bank typically ends up with the home, which was used as security for the note signed by the previous owner
Lender-owned properties are sold "as-is," meaning the buyer is expected to do an inspection, with a licensed contractor, at the buyer’s expense. (The seller has never lived in the property, and in most cases, has never personally seen the property.) The buyer will be required to sign an "as-is" addendum and other corporate addendums that explain the banks terms, late fees, related services and conditions.
Banks recently have changed gears and no longer are selling houses for way below market price. Those great deals that people talk about are becoming fewer and farther between. Banks are now looking to sell properties at market value or at 10% below market value in order to minimize loss and maximize profits. There are definitely houses that are fixer-uppers, but many banks are repairing them prior to listing the houses.
Bank-owned properties can still be a good buy. Not all bank repos are in poor shape, many of them are brand new. Talk to your Las Vegas real estate agent for more information on condition and availability of new home repos.
Short Sales:
A short Sale is when the homeowner owes more on their mortgage more than what the property is currently able to sell for in today’s Real Estate market place.
This can occur for many different reasons. Equity lines of Credit where the homeowner takes money out of the equity of their home to pay off bills to an amount greater than what the house can sell for including closing costs.
Another possible scenario would be the type of loan the homeowner took out originally that may be an Interest Only loan with negative amortization and penalty fees for pay offs, 100% loans and Option Arm Loans. The homeowner now may owe more than the home is worth and would have to actually come up with the difference in the money in order to sell their house.
Short Sales are many times one of the first steps in the Foreclosure process. A Short Sale is definitely, a better option for the homeowner than Foreclosure. As a Realtor, I have helped facilitate Short Sales and work with Lenders on behalf of homeowners.
The Short Sale process must be agreed to by the Lender, the mortgage holder. There is quite a bit of paperwork involved in this process where the Lender asks the homeowner to provide documentation proving their inability to keep up with the house payments. W-2’s, pay stubs, tax returns are just a few of the items needed by the Lender. Lenders work with Realtors quite often on Short Sales.
Some Lenders would prefer a Short Sale rather than a Foreclosure. One very important item that all homeowners contemplating a Short Sale need to be aware of, is the difference in the amount that the Lender forgives (and some Lender’s don’t forgive), the IRS does not.
For homebuyers considering buying a home that is considered a Short Sale keep in mind that the bank has to agree to the offer and terms related to the offer. Your Realtor can help you with finding terms that the bank would consider. Most banks in the past have been firm with their price and terms but with the real estate market taking some hits in price banks are starting to be more flexible with what they are willing to accept from potential buyers. What isn’t changing so quickly are there response times to buyers. Some banks can take up to 3 weeks to respond to an offer. So if you are looking for a home in a short amount of time a short sale might not be the right type of home for you. Your Las Vegas Realtor can help you determine if a short sale home is right for you.
Here are some strategies to help negotiate the best deal possible:
Call Us: We are your best bet to get the deal done.
Closing: When writing the offer, make the closing as short as possible. Within two weeks would really appeal to most banks. The faster they sell it, the more money they save. If there are two offers at the same price, the offer with the quicker close may be chosen over the other.
Cash: A cash deal will always be strong, especially if other offers are being financed. To make your cash offer even stronger, you should submit proof of funds to close at the time you submit your offer.
Buying with financing: Having your loan pre-approved prior to buying is crucial. Most banks would rather have someone purchase the home with a conventional loan rather than an FHA or VA loan. With the exception of purchasing a HUD home or VA repo, the guidelines for these types of loans can sometimes slow or even stop the buying process, and banks would like to avoid these loans. Most banks will want you to pre qualify with their bank to ensure that you can actually qualify. Don’t be surprised if they try to compete with your bank to get you a better rate, which benefits both the buyer and the bank.
Clean offer: When submitting an offer, keep in mind that banks usually do not like to pay points or make repairs. Always try to use the title company they stated in the listing. Basically, the more the bank nets, the better the offer will look. Always submit your loan-approval letter with your offer (when financing is being used).
Contingencies: Try not to add too many contingencies when writing the offer (home inspections, contractor inspection, financing, etc.). The more contingencies, the more reluctant the bank will be to accept your offer. It has been our experience that it is rare for banks to actually accept an offer with a contingency.
Last but not least ...
The seller is a BANK, not a person. They are not emotionally attached to the property. It’s all about whether the numbers work or not.
When purchasing these types of homes, securing a contractor/advisor to evaluate a home in consideration is a good idea. Sometimes, it could cost you more to fix up the home than it's worth!
After you get the offer accepted and successfully negotiated, the clock starts ticking. Normally, you have anywhere from five to 10 days to get the house inspected. If the inspector finds something wrong with the property and the bank is not willing to fix it, you can back out of the deal. If everything is satisfactory, the transaction moves on, without any other contingencies for you to back out and retain your earnest money. Performance is paramount. Don't miss dates or deadlines! Many banks have penalties for not closing on the agreed date. The lender must know we are dealing with a bank and could be held responsible for any penalties as a direct result of the lender not closing on time.
Once the final papers have been signed and escrow closes, it typically takes 48 hours to record. Until the sale is recorded by the county, keys cannot be given to the buyer. Banks do not work on emotion; they will not release the keys until recording the transaction, no matter the situation.
Good-condition repos always sell fast. Keeping up-to-date is crucial; we have agents specifically working this niche. Contact us to keep informed. You don’t want to miss that great deal!
