Pinetop White Mountain Blog

Good Morning Everyone,

Buying foreclosure property is not at all the same as buying a retail seller's property.  You can pretty much count on anything you may have come to expect in a Real Estate transaction to be tossed casually out the window.   

Bank Owned properties are handled by out of State Real Estate Companies called Asset Managers.  Asset Managers are basically a Real Estate Company who's sole purpose is to liquidate the bank's assets obtained through Foreclosures or Deed in Lieu of Foreclosure actions.  They contract with agents in the States where the properties are located to market them for them and to produce a buyer who is willing and able to accept their terms and conditions to the sale. 

There are some pretty common threads in each of these transactions.  The following is the "short list" of things you can expect:

1)  The property is going to be sold "AS IS" & "Where Is" and you will be required to sign an Addendum that states that you understand and accept those terms. 

2)  If you normally get a 10 day Inspection period, it will probably be cut to five (5) or seven (7). 

3) If the property is winterized, it is possible that the Bank Addendum to the Contract  will include verbiage that requires that you pay to re-winterize the property at your expense after your inspections are completed. 

4) You will not be provided any Disclosures Statements with the exception of of a Lead Based Paint Addendum as it is required by Federal Law. 

5) If repairs are required in order for you to qualify for your loan; one way or another you will have to pay for the repairs yourself.  If the appraised value allows, the cost of necessary repairs may be added to the loan amount.  If there is no room on the appraised value, you may be required to produce additional cash at closing (or before) to pay for those repairs yourself.  Some banks are more flexible than others and on occasion the bank may incur the cost of necessary repairs to protect the property from further damage or to correct safety concerns.  That is the exception though, rather than the norm.

6)  You may be permitted to choose your own Title Company but you may also incur extra cost to do so.  Asset Managers have contractual arrangements with specific Title Companies and if you do not use their chosen Title Company, they often will require the buyer to pay for their own Title Policy and that cost can be significant.    

4) Last but not least, be very careful what that Bank Addendum says about the type of Deed you will get to the property at Closing.  While I am not an Attorney and cannot provide you with any advice in this area you need to be sure that you address this issue to get as much protection on the final Deed as possible.  You will need to consult with an Attorney or other professional for advice in this area.  Just be sure you understand what is being said in the Bank Addendum regarding the type of Deed they will issue at closing. 

The point in this is to help you as a buyer to understand that while the prices of Bank Owned property may be very appealing, there are many pitfalls that could come back and bite you later if you are not very careful.  You need guidance of a professional to help you understand the benefits and pitfalls of buying Bank Owned Property. 

If you are still of a mind to buy this type of property and you are looking for the right deal in the White Mountains of Arizona, give me a call.  I have the experience to help you through these problematic transactions.

Have a great day and I look forward to hearing from you soon.

Sandra Paulow, Associate Broker, GRI 

Your High Country REALTOR®  (928) 242-0300