Pinetop White Mountain Blog

Good Friday Morning Everyone,

I hope this finds you all safe and well and looking forward to the weekend.  If you are planning on house shopping though I thought it might be worth the time to help you understand some basics about buying in today's market, particularly Bank Foreclosures.

Buying a Bank Foreclosure is not like buying a house from a regular seller.  Regular sellers want to sell and they are bound by the terms of the Purchase Contract in the State in which they live.  The Buyers have boundaries too so it all evens out. 

However, buying a Bank Foreclosure is an animal of a different color.  Banks are NOT nice.  They want to dump their failing assets on the first unsuspecting qualified buyer they can find.  They don't negotiate much on price and their Bank Addendums that will ultimately take the place of a Purchase Contract bind the buyer up in ways they can't even begin to imagine.  Essentially, the buyer has no protections as all, everything weighs heavily in the Bank/Seller's favor.  The buyer assumes responsibility for the property from the day the contract is accepted until it closes.  In some case they may even be required to pay to turn on utilities so they can conduct their inspections.

In an Arizona contract you will have a minimum of 10 days to complete your inspections.  In a Bank Addendum  they can cut that down to 3 days, maybe 5 days, and on a really generous one 7 days.  That means that if you want to conduct inspections you better have them lined up before you ever send that contract back to the bank. 

Next is the question of what kind of deed the bank is going to give you.  There are many kinds of deeds and some are better than others.  The best is a General Warranty deed that indicates that a complete abstract of Title has been done and the property will pass clean and with the most protection under the Title Policy. 

The most likely kind of deed you will get is a Special Warranty Deed.  That means that the bank will only insure that Title is Clear for the time they have owned the property.  There will be exclusions on the Title Policy and unless you as the Buyer are willing to pay for better coverage out of pocket this is the best you can hope for from a Bank.

There are other types of deeds that will be issued in the Bank Addendum and they are not worth the paper they are written on.  Make sure your Agent draws a line through the other types before you submit that Addendum back to the Bank.  If you were to accept one of these deeds you could find yourself down the road with a house that someone else claims to own.

Finally there is the repair issue.  Banks don't do repairs.  If something shows up on your inspection or your appraisal that is going to have to be repaired before you buy the property, you need to be prepared to come out of pocket for the cost of that repair, and keep in mind you are spending your money to fix something someone else owns.

The bottom line here is if you THINK you want to buy a Bank Foreclosure you need to be prepared to play by their rules.  They don't negotiate, they don't fix anything, they are like the three monkeys, they see nothing, they hear nothing, and they Do absolutely nothing.  You buy under or terms or you don't buy at all.

Can't live with any of these, than you need to focus you attention on buying something other than a Bank Foreclosure.

Hope this helps you to understand what you are up against.  Buying at a great price has it's pitfalls as well as it's benefits.

Thanks for reading, until next time...

Sandra Paulow, Associate Broker, GRI, SFR, REALTOR® (928) 242-0300