Foreclosures and Bank Repos

There are several types of bank repos, but they all have a common element: Someone could not pay his or her mortgage payments. The bank or owner of the secured note then initiates the foreclosure process. In the end, the bank typically ends up with the home, which was used as security for the note signed by the previous owner. This is how a bank repo comes to be.

Click here for information on government-owned homes (HUD and VA)

How do you purchase a bank repo?

For starters, you should contact the MillionSaver team. We are familiar with the lending, procedures and services related to lender-owned properties. Lender-owned properties are sold "as-is," meaning the buyer is expected to do an inspection, with a licensed contractor, at the buyer’s expense. (The seller has never lived in the property, and in most cases, has never personally seen the property.) The buyer will be required to sign an "as-is" addendum and other corporate addendums that explain the banks terms, late fees, related services and conditions.

Banks recently have changed gears and no longer are selling houses for way below market price. Those great deals that people talk about are becoming fewer and farther between. Banks are now looking to sell properties at market value or at 10% below market value in order to minimize loss and maximize profits. There are definitely houses that are fixer-uppers, but many banks are repairing them prior to listing the houses.

Bank-owned properties can still be a good buy. Here are some strategies to help negotiate the best deal possible:

Closing: When writing the offer, make the closing as short as possible. Within two weeks would really appeal to most banks. The faster they sell it, the more money they save. If there are two offers at the same price, the offer with the quicker close may be chosen over the other.

Cash: A cash deal will always be strong, especially if other offers are being financed. To make your cash offer even stronger, you should submit proof of funds to close at the time you submit your offer.

Buying with financing: Having your loan pre-approved prior to buying is crucial. Most banks would rather have someone purchase the home with a conventional loan rather than an FHA or VA loan. With the exception of purchasing a HUD home or VA repo, the guidelines for these types of loans can sometimes slow or even stop the buying process, and banks would like to avoid these loans.

Clean offer: When submitting an offer, keep in mind that banks usually do not like to pay points or make repairs. Always try to use the title company they stated in the listing. Basically, the more the bank nets, the better the offer will look. Always submit your loan-approval letter with your offer (when financing is being used).

Contingencies: Try not to add too many contingencies when writing the offer (home inspections, contractor inspection, financing, etc.). The more contingencies, the more reluctant the bank will be to accept your offer.

Last but not least ...
The seller is a BANK, not a person. They are not emotionally attached to the property. It’s all about whether the numbers work or not.

When purchasing these types of homes, securing a contractor/advisor to evaluate a home in consideration is a good idea. Sometimes, it could cost you more to fix up the home than it's worth!

After you get the offer accepted and successfully negotiated, the clock starts ticking. Normally, you have anywhere from five to 10 days to get the house inspected. If the inspector finds something wrong with the property and the bank is not willing to fix it, you can back out of the deal. If everything is satisfactory, the transaction moves on, without any other contingencies for you to back out and retain your earnest money. Performance is paramount. Don't miss dates or deadlines! Many banks have penalties for not closing on the agreed date. The lender must know we are dealing with a bank and could be held responsible for any penalties as a direct result of the lender not closing on time.

Once the final papers have been signed and escrow closes, it typically takes 48 hours to record. Until the sale is recorded by the county, keys cannot be given to the buyer. Banks do not work on emotion; they will not release the keys until recording the transaction, no matter the situation.
 
Good-condition repos always sell fast. Keeping up-to-date is crucial; we have agents specifically working this niche. Contact us to keep informed. You don’t want to miss that great deal!

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