Now that the bank has possession of the property
they have to act as a responsible owner and protect their asset. Remember
as discussed on the New
Hampshire foreclosure Law and Process page, nobody was willing to
pay the minimum price to own the property at the auction. Most likely it
was because there are some serious issues that have to be addressed before
it will be saleable.
bank will handle the eviction, if necessary, and may do some repairs.
They will negotiate with the IRS for removal of tax liens (they will
have a better chance of getting a reasonable settlement than you would).
They will pay off or negotiate any other liens on the property to clear
the title.,. As a purchaser of an REO property, the buyer will receive
a title insurance policy and the opportunity to go on site and inspect
Because the bank is doing all this work, and spending more money on the
property, the idea that bank will dump it for pennies on the dollar is
not likely. The big banks have entire departments to manage and sell their
repossed real estate. Many times these departments will rely on local
property management companies to go on site and deal with the issues like
repairs needed to maintain the integrity like holes in the roof, or pest
infestation Don't expect them to do any cosmetic repairs or updates to
the property. In fact the inspection of the property management
company or the banks own employees is NOT the same as an inspection by
a certified home inspector.
When the bank sells the property it will be considered in "as is" condition.
They have to disclose any problems that they are aware of, so the less
they know the better. It is up to you to perform an inspection or pay for
one from a professional.
The next step the bank will do after clearing the title an dealing with
above issues, is to hire a real estate firm to market the property for
and represent them in the process of selling it. The real estate agent
will perform a CMA ( Current Market Analysis) to determine the listing
price. This is the number that the bank will think is how much they can
sell the property for. If the Real estate agency is not aware of any hidden
issues,(remember no real detailed inspection has been done) the price may
The smartest way to approach a bank owned property is to have a local
real estate agent represent you. Why?
- Well consider this
You may provide the listing agent confidential information such as salary,
the maximum you spend for a home, your assets and credit history,
and believe it will facilitate the approval process. But you may
subsequently be shocked to learn that the agent to whom you have given
this information actually represents the bank and, even more importantly,
has an obligation to disclose this information to them.
- Also they hired a real estate agent to represent their interests and
the interests of their stock holders, don't you deserve the same.
Yes the real estate agent has to disclose who they are working for. But
they do not have to tell you what they will not do for you in the process,
and they do have to compensate your agent from the commission portion of
If you choose to use one of our real estate agents here is what you can
expect for service and normally at no additional cost to you.
We will promote and protect interest of you the buyer at
We will know if the CMA is reflecting
the current values in that neighborhood not the maximum they think they
can get for it.
We will have a list of home inspectors who are looking out for you.
We will arrange property showings.
We will prepare a property value study.
We will explain the forms and agreement that will be used.
WE will Disclose all research about property history and liens.
We will Structure offer with the buyer's interest in mind.
We will Keep your financial capabilities/thoughts confidential
unless authorized to disclose.
We will Negotiate best price and terms in your favor.
We will be there at the closing to advise you if any last minute issues come
and most importantly we will tell you when to walk away, and help you find a
better deal elsewhere.
Now that we have covered how the process is done by the bank, we will
discuss what will happen when you have found a property you are interested
in. ( we will cover how to find the properties on a different page)
- First, we will schedule an appointment
to see the property with you.
- After our visual inspection we will do our
own CMA ( competitive Market Analysis) to get see where the if where
the asking price compares with other properties currently for sale
in that neighborhood.
- Next we will try to ascertain how much the bank has in the property
and if there was any equity.
- Then we will determine if the bank has spent that equity on removing
IRS leans or making repairs.
Now we are ready to make our first offer. We strongly recommend that the
offer contain contingencies that will include a home inspection, that unfortunately
will be a cost that you will have to pay,since the bank will not pay for
it, and any other conditions that we discover in our preliminary investigation
that may need to be addressed.
The offer process is not like making an offer on a property that is not
an REO. Here is a typical way the process will happen.
If the bank has hired a listing agent to represent them that agent will
most likely not be talking to them directly. Most banks require the offer
to be faxed to them.
- We will present an offer on your behalf with the conditions we think
need to be meet. the amount we offer will be below what we expect them
- Almost all first offers are rejected because the bank needs to
show their stockholders they have made the best effort to get the
- The offer we make will not be reviewed by a single person and may take
as long as 5 days to hear back. It will be rejected.
- The bank will send a counter offer.
If the offer is where we really
wanted to be, than we proceed with inspections. If it is not we will
go to phase two of the offer process.
- We make our counter-counter offer. either at the price we really wanted
to buy it at or still lower, depending on the terms of their counter
- For example; they may have included some repairs in their offer.
so our intended purchase price is good.
They will either accept at this point or counter again, and when we have
an agreeable offer they will most likely add a clause that is "subject
to corporate approval with in 5 days".
At this point we have a conditionally agree purchase price with an agreement
that is reliant on our conditions. We order the home inspection and if
all goes well you have bought a home at a great deal! If not, its back
to the negotiation table.