Banks Are Sellers Too.

By Kay Wilson-Bolton At a time when the public and the real estate community are trying to understand and develop expectations for buying a bank-owned home, the rules seem new every morning. Dilemmas range from whether or not to ask for repairs up front or gamble that the seller will agree to make repairs during the inspection period. Another is whether or not the bank will agree to a request for a price reduction rather than start over with a new buyer.What we know for sure is that anything is possible. Consider one property in Oxnard which has received 19 offers in the last 12 months-three offers were accepted, but each escrow failed because buyers were either not qualified or lender required repair costs exceeded buyer’s ability to pay.The same house was just sent to auction at the same time the price was reduced to one below the last offer.In another case, a buyer paid over asking price with an all cash offer competing with 8 other buyers. In three weeks, the lender stated she was not qualified for a loan. Her agent wrote an apology note to the listing agents stating that the buyer had purchased so many properties the lender would not approve them for one more.The seller, in this case a bank, has no sympathy for this buyer and is demanding the deposit as liquidated damages.Then there is the bank addendum. As a condition of acceptance of an offer, each seller/bank its own variety of addendum which clarifies, amplifies and amends certain provisions of the purchase agreement.One alteration negates the whole document. It’s take it or leave it. Their attorneys are bigger than anyone else’s.The most difficult challenge is the house with mold. It is almost impossible to get an accurate estimate of the scope of work in order for the bank to approve the best bid. The cost for testing at the beginning and at the end is clear. The remediation estimate is accurate only so far as the contractor can “see the problem”. Not until the area is opened up is the real scope of work evident. After the affected areas are moved, it is necessary to replace cabinets, sinks, window casings, bathroom tile and floor coverings.It often takes many days to get the lender/seller to review the bids, calculate the time to complete the work and the rate of market decline ahead. Meanwhile loan locks come and go and buyers watch other purchase opportunities pass them by.The time it takes some asset managers to return fully executed documents is so long that the time frame for buyer’s inspection often expires. Before escrow is opened, some buyers have already completed their inspections and are requesting repairs or concessions.Many buyers are discouraged that their offers, even at asking prices, are not being accepted due to multiple offers.