I've seen a drastic increase in the number of listings with Wells Fargo, HomeTrust, TD Canda Trust or some other financial institution in the Seller's description. Obviously someone wasn't able to pay the bills anymore; It comes with the territory in an economic slowdown. This is just a quick entry with some tips on purchasing these properties.
Buying as-is - Frequently you will see the description include all kinds of words and phrases that seem to be the opposite of selling points. Comments like "no guarantees implied", "purchased as is - no warranties", "UFFI cannot be verified". Due diligence is always important - do a home inspection, follow up any possible issues and also have some room in the budget for unknown problems. This is not neccesarily an indicator of a home that has problems. A bank will throw every disclaimer at the buyer possible to relieve as much responsibility from the property as they can.
What if there's a problem - Recently a client made an offer on a bank sale property. On home inspection there was obvious water problems in the basement (sometimes it pays to do inspections on a soggy day!). We took what I feel is a good course of action - had a contractor give us a formal estimate on what it would cost to rectify the problem and made the bank aware of this information. We ended up negotiating a price that included a full subsidy for the basement issue.
How low is too low? Generally I work off common sense - at what point does it make sense for the seller to reduce the price and remarket the property versus accepting your offer? Say you had a house listed at $280,000 - I would say anything under $250,000 probably is out of the question. The reason is that is if the bank reduced the price by $15,000, re-marketed the property and sold for $260,000 after 2 months, they are still ahead of the game. Keep in mind that a bank will almost often want more than your inital offer. I had one circumstance where they specifically said they would not sign back - just accept or reject.
It is quite easy to pull off a list of bank sales. These houses all have a value - maybe the banks aren't doing the best job at pointing out the benefits, but they sometimes are no the bargain most people would think the are. Do your homework and be sure the value is there.
