Since 23% of homes on the market are bank owned foreclosures in the Phoenix Metro Area, a lot of buyers have questions about how a real estate transaction works on these homes. Realistically, there are more similarities than differences when you compare the transaction to a traditional for sale property. The main difference is that the seller’s of these foreclosures are banks and not a person.
Here are few tidbits of information on bank owned homes:
- In order to ‘make an offer’ on a bank owned property you will need a loan status report (it’s like a pre-qualification letter) or proof of funds if you are paying cash.
- The property is sold ‘as is’ and the bank will not provide a seller’s property disclosure (SPDS) or homeowners insurance claims historty report (CLUE).
- The bank usually takes up to five (5) business days to respond to an offer. They can either accept, decline or counter offer.
- An average close of escrow for a bank owned home is 25-40 days.
- There is a ten (10) day inspection period upon acceptance of a contract. This time period allows buyers to inspect the property for material defects. However, be advised that the bank will make no repairs to the property. (hence ‘as-is’). Upon expiration of the ten day inspection period your earnest money will become ‘hard’ unless there is financing issues and you can no longer qualify for the loan.
- Foreclosures in the Phoenix area are selling for an average of 97% of the asking price. Therefore, you should have realistic exceptions on how much of a discount you can expect to get off the list price.
