Making an Offer on a Bank Owned Home in SW Michigan, Part 1

I'd like to help take the stress out of buying a bank owned home in SW Michigan, especially Kalamazoo or Portage, MI.  You may be hearing the terms; bank-owned, foreclosure, REO Property, corporate owned.  Well the good news is they are all the same thing.  HUD Homes are a bit different, we'll get into those another day.  Short sales are a different animal as well.  Short sales too will be covered another day.

The goal here is to help you come to grips with the process of making an offer on a bank owned home.

Buying a bank owned home is very different than a traditional real estate transaction.  Maybe the biggest difference is THE SELLER IS IN CHARGE.  You will complete all of the usual MLS paperwork with your agent first, but if and when your offer is accepted, the lender/seller will supply you with a  whole stack of additional paperwork for you to complete.  Be advised, their paperwork rules!  In other words, if their is a dispute, a contradiction, a misunderstanding about a contractural item.....THEIR documents supercede the MLS documents you signed with your agent.

Another important thing to remember is the lender/seller usually has another 100 or 200 or more properties on their desk.  Don't expect to be treated in a special fashion.  Don't expect to be able to call the lender/seller and ask questions about the property or about the paperwork. 

The LISTING agent may be able to help you via your buyers agent.  But remember, the listing agent is simply a pipleline to the seller/lender.  The listing agent has no real power.  They can't negotiate terms, they can make no committments on behalf of the seller.  They are a pipeline or a conduit of information for the lender/seller.  Remember too that the listing agent is working for the lender/seller, not for you.  YOUR agent is your buyers agent, so that is to whom your questions and concerns should be directed.

Be On Time...Get your loan approved on time.  Push your lender.  Make sure they understand that if they miss a deadline, you run the risk of losing the property and possibly your earnest money deposit.

Be On Time.....Get your insurance lined up. Get your home inspections going.  Be aware that many bank owned homes are sold as-is.  You should arrange for inspections (at your expense) but typically, lender/sellers will not renegotiate the price if you find something you don't like about the house.  If the utilities haven't been turned on, you may have to arrange to do that in your name and at your expense.

Be On Time....Closing date is critical to lender/sellers.  Once they agree to a closing date, they expect that to happen.  You may be charged a per diem of $100 or more per day that the closing is delayed if it is not the fault of the lender/seller.  They are very serious about getting the property sold and they expect you to be just as serious about buying it.

Be Serious....Generally, lender/sellers will not look at "low-ball" offers very closely.  If the property is fairly new on the market, you are wasting everyone's time by submitting a low-ball offer.  These guys know what their property is worth.  They usually received two opinions of SW Michigan real estate agents and a written appraisal is not uncommon for them to buy to help them determine the value.  Of course you want the best deal you can get, but so do they.  You'll have to balance your desire for the property against the possibility of having your offer ignored while others are given serious consideration.  Cash is best, of course.  Don't try to finance a property that needs work with a loan that requires the property to be in move-in condition.

Don't Be Shady or Tricky....They are just not interested in anything but getting the property sold.  Keep it simple.  Keep it straight-forward.

Be Prepared....You should have your loan application in, be fairly clear on the rates, terms and fees BEFORE making an offer.  If you are paying cash, have a bank statement or a letter of credit ready to submit with the offer.

 Watch for Making an Offer on a Bank Owned Home Part 2, coming soon. 

Meanwhile, be sure to visit the Kalamazoo and Portage area's most comprehensive site for real estate information.  There is even a page there which allows you to search for properties not only in Kalamazoo or Portage, but all over SW Michigan.  Find that page here. 

Feel free to contact me if you have any real estate oriented questions, especially questions that involve the purchase of bank owned homes in Kalamazoo, Portage or anywhere in SW Michigan.  My name is Joel Nelson, my email is Joel@AHeadForRealEstate.com