Buying A Bank Owned Home...Does It Offer The Financing Options You Need?

If we listen to everything we read or hear on the news we are told to look for a bank owned property. The news would like you to beleive the banks are giving these homes away at substantially below market value prices. While in some cases this may be true; it does not necessarily always hold true. And when the home is priced low is the bank willing to do the necessary repairs to meet the requirements of certain types of financing?

The bansk are not in the real estate business to buy and sell homes. They prefer to not have to foreclose on a home. When they do; they do a valuation of the home. One part of the formula they use to decipher a price is the overall condition of the house. they evaluate the needed repairs and cost versus sellign the house "as is". Most times they will sell the home "as is" meaning what you see is what you get.

In this economic times we are seeing more people use FHA or VA type loans. Interest rates are historically low and have remained that way for almost two years. Why put a substantial down payment down if you do not have to?

The problem with this is that FHA and VA have certain requirements that a house has to meet in order to qualify for those type of loans. When you are purchasing a home from a homeowner the chances are great you will not have this issue and if you do they will do the repairs to meet the requirements if they have to.

But what about the bank owned homes? I have a lot of buyers looking for those type of homes. Yet they do not realize that it may not qualify for the loan. The apprasier has a list of requirements a home must meet in order to pass an FHA or VA appraisal in addition to the price. If the home does not meet thsoe guidelines the apprasier will note on the apprasial that the value is subject to the following repairs. Thus the repairs must be done to pass the appraisal test.

Banks generally state upfront on their cover letter for offers that they will NOT perform any repairs to the house. In addition I am seeing more times now that they are stipulating upfront that there homes MAY not qualify for these type of loans as well. Talking with a few Realtor friends who specialize in bank owned listings they said more deals are falling apart becuase of the apprasial asking for repairs to be done; and the banks unwillingness to do them.

Before you make an offer on one of these type of homes make sure your Realtor is confident it will pass the FHA or VA appraisal in the condition it is in now. If they are not, and you proceed, you may be out the appraisal cost and valuable time looking for a home. I have had some homes that I and the mortgage broker felt would pass and have not and others where the buyer wanted to go forward and they have passed.

It is very subjective. Before you look at or put an offer in on a bank owned home check to see if the bank is offering that type of financing on the house and if your Realtor feels that the house will pass the apprasial inspection...

Dave diCecco
Realtor/Broker
www.davedicecco.com