Tips on Buying a Bank Owned Home in Folsom

Aaah do you remember the day when buying a house was as simple as a handshake and signing on ONE dotted line? Neither do I, but I hear those days did exist. Interesting that over time we have actually invented ways to make things more complicated, not less.

Enter the property owned by a bank. If you are thinking of purchasing what is commonly referred to as an REO, or a foreclosed property, there are some things you should know.

The first thing I would highly suggest is that you enlist the services of as many professionals as possible. It's good to listen to one professional, especially if you know that person; but do not limit yourself to one person's perspective.

You will need a lender, a realtor, a home inspector and an insurance agent at the very least. The beauty of all this professional counsel is that all of these people, with the exception of the tax preparer, can be paid (if you make the request known) thru the closing of the home loan. In a lot of places, the realtor is paid by the seller so that fee isn't even yours in the first place.

You could go to a bank for your loan or you could go to a mortgage broker. Since I am a mortgage broker I would prefer you come to me but the truth is, sometimes the bank just has a better deal. If you are a nearly perfect buyer with around 10% down and have been with your bank your entire life, then they may serve you better. However, if you have had some credit challenges and perhaps some gaps in employment, then a mortgage broker is a better avenue for you, especially if you are low on downpayment funds. The mortgage broker community generally is better versed in downpayment assistance programs and things of the like.

Before even making an offer, have your real estate agent be sure to run some comparables. Do not presume that just because you are buying a foreclosed home that you are getting a good deal! No way. Last I checked, banks were in the business of making lots and lots of money! Selling foreclosed homes is another avenue of that making lots and lots of money) purpose.

Notwithstanding the above, if your real estate agent discovers that the price is reasonable, then I suggest writing an offer that is unashamedly dripping with conditions that are entirely for your benefit. There have been times in other markets where we took what we could get and were in fact grateful to have the "winning bid" on any given home. Suffice to say we are not in that market today. There is a considerable amount of houses for sale in Folsom California and in a lot of other places.

A contract that is dripping- with- conditions- for- your- benefit, in my opinion, includes: seller pays closing costs (including buyer's costs up to 4%); seller pays for termite report and clearance; seller pays for home warranty. Additionally, I would offer less than asking price. Again, we are in a market that supports this type of offer. You have hopefully found a real estate agent that is in there to get YOU the best deal, not to get the bank more and more money.

With bank owned properties, it is imperative that you go thru that house with a fine tooth comb. Banks are not necessarily subject to the same disclosure laws as regular owners and so it behooves you to have that home inspector provide you with a thorough report. Do not mistake the appraisal for a home inspection. The appraiser works for the Mortgage Broker or lender. Mostly his job is to simply make sure the bank is not over lending on a home. The appraiser will also do a once over on the house just to make sure it's in livable condition. Beyond that, much could be wrong with the house that an appraiser would never find. I have found a lot of excellent home inspectors. They inspect your potential home as if they were going to live there themselves. It's pretty cool. They give you an entire book sometimes on all of the details of the house. In my estimation, the home inspector provides the most value out of all the professionals involved. That's not a fact, it's just my opinion and I am sticking to it.

You will need an insurance agent. There are so many types of coverages, just be sure you understand all of your options. Get more than one quote too.

These professionals are paid to be your eyes and ears thru this homebuying process. The more help you get, the more you will be able to relax and enjoy the experience of purchasing your home!