During your search for a home on the Oregon Coast, have you thought about purchasing a bank owned property?
People have a fairly accurate impression that great bargains in the form of deeply discounted prices can be found within this category. While generally true, bank owned properties present several unique challenges. Read on to become an informed buyer.
The big challenge is getting through the inspection process. Under Oregon law, financial institutions are exempt from the Disclosure requirements of all other Sellers. This means that the sale is always an “as is where is” situation. The bank will not negotiate (pay for) any needed repairs. So the prudent Buyer will need to be prepared to pay for all inspections whether the sale succeeds or fails.
The inspection process is not so simple as most bank owned properties are the result of foreclosure. The best managed properties have been winterized to prevent freezing water pipes and all utilities have been disconnected. In order to perform an inspection of all the functions within the home, water, electricity and gas service (if appropriate) must be reconnected. In some service areas, this can be done for a nominal fee to the Buyer. Again this is a Buyer cost.
Assuming that all the inspections pass on the home’s structure, utilities and mechanicals, the other big factor is an assessment of the general condition of the home. Many foreclosure actions result in damage or removal of fixtures by the departing property owner. For example, it is not at all unusual to find everything remotely portable stripped from the home. This includes kitchen cabinets, appliances, plumbing fixtures, light fixtures and even flooring. In some cases the departing owner will do extensive damage to walls, doors, windows and remaining fixtures as a way of “getting back” at the bank for taking the home. Some of the costs to repair or replace may be reflected in the offering price with a cover letter to the bank with written bids for the work.
The final hurdle in the purchase of a foreclosed property is negotiating with the bank itself. The bank will demand proof of pre-approval if a new loan is being obtained for the purchase, as well as proof of adequate funds to close.
The brokers in our Newport and Seal Rock offices can guide you through the sometimes time consuming and frustrating process of buying a bank owned home along the Central Oregon Coast. We want you to get the financial advantages, so our job is to help you avoid all the possible pitfalls along the way.