We list foreclosed bank properties every day and receive a lot of questions from Buyers and Realtors®. There is a bit of misinformation out there regarding bank owned properties, so let's bust some myths!
Banks always prefer cash offers... FALSE!
There is a common misconception that banks will bend over backwards for a cash buyer. It isn't the cash that turns the bank's head—they couldn't care less where the money comes from—it's the fact that most cash offers lack appraisal and financing contingencies. This makes for a potentially quicker and smoother transaction than with a financed buyer. A bank will not always favor a lower cash offer over a higher financed offer, it depends on a variety of factors. Cash is generally king, but not always. Make sure your agent knows the difference.
Banks will not repair an "as-is" property once under contract... FALSE!
People ask us about this one all the time. Even though the property may be AS-IS, there are certain situations where the seller might make repairs. Make sure you have an experienced agent on your side who can help you determine if this is the case.
The "close of escrow" date is when I will get my key... FALSE!
Forty percent of all sales in the Arizona Regional Multiple Listing Service (ARMLS) are foreclosed homes. Due to this incredibly high volume, title and escrow companies have backlogged schedules. We advise all of our clients to allow a buffer of at least 5 working days after the original close of escrow before making any moving arrangements, etc. Sometimes title issues crop up at the last minute, and these can delay closings as well.
Buying a foreclosure is risky... FALSE!
We get questions all the time from buyers about whether they will be buying a property with outstanding liens, tax payments, past-due HOA fees and fines, etc. Every one of our transactions goes through a national escrow and title company, and every buyer receives insurable title to the property. All liens, past-due tax payments, past-due HOA dues and fines, etc. are all cleared and paid current to the close of escrow date. Every buyer gets title which is "free and clear". In the rare instance when something unusual does pop up, you will be covered by your title insurance policy. Pay close attention to your preliminary title report, and make sure your agent knows how to spot red flags.
Foreclosures always sell for below asking price... FALSE!
With the high volume of foreclosure sales in Arizona, it is very common to see multiple offers. Foreclosures in prime locations and in move-in ready condition sell very quickly—often within days of being listed. Make sure your agent is sending you properties THE MOMENT THEY ARE LISTED. Due to the 48 hour update lag with consumer real estate web sites, by the time you see a nice foreclosure in REALTOR.COM it will most likely already have offers.
If you are a cash buyer and looking for a real bargain, we work with several auction houses and can help you pick up a property for pennies on the dollar!
Banks always accept the highest offer... FALSE!
A bank will accept an offer which reflects terms that are most agreeable to the bank. That does not necessarily mean they will take the highest offer. A higher offer could have a longer close of escrow, or financing terms that may not work for the property's condition, or the offer may reflect a purchase price outside of the expected appraisal range. There are a variety of factors that come into play, so make sure you have an agent who knows how your offer stacks up to the competition.
If you have any specific questions, or would like to explore purchasing a foreclosed property, please give us a call at (480) 302-9650. We'd love to help!