My two sales each closed a day late.  A colleague told me he had one close 2 weeks late and another told me of one that close a month late.  Thiscosts the buyer and in retrospect, the bank money.  As a buyer of a bank owned property there is nothing, I repeat nothing you can do about the delay.  The process for selling the property is complex and the bank divides the job into segments.  The listing agent deals with someone called an Asset Manager.  This person approves the contract, sends out the bank term sheet, negotiates with the buying agent and signs off on the process.  Then someone else comes in.  This is the un-named mystery man or woman who has control of the deed and HUD-1.  They are the lynchpin in the process.  They are the ominous power  in the process and if they decide not to send the critical documents to the title company we wait until they do it.  No one can talk to them.  No one knows who they are, not the listing agent, escrow officer, or buyer’s agent.  Just in case you’re wondering what this picture is, it’s a lynchpin.

If you think buying a bank owned property will save you money you may be right.  You may be wrong.  It could cost you in added fees because your loan doesn’t close on time.  It could cost you higher interest.  It could throw off a timetable for a move causing additional rent, or charges for having to cancel or delay a contract for repairs to the new house you are buying.  There are lessons to be learned in buying a bank owned property and the first one is expect delays so allow for them.  It could save you money and energy.  Don’t lock in a loan rate until you have cleared some of the hurtles in the purchase.  A 30 day rate lock in a normal sale is fine, but it may not be fine with an REO.  Your lender should be able to help with this.  Allowing for extra delays makes for a happy life and perhaps a surprise in the end when the close takes place when it should rather than when the bank arbitrarily  decides it will.

The operating word in buying a bank owned property is PATIENCE.  You must be a patient person and understand that when we say we’re waiting for the bank to perform, we are.  The banks hold the trump cards today.  They control the entire process from the beginning to the end.  They keep us on our toes as Realtors and they sure make me wish I could become a Genie and pull that HUD1 and Deed out of the thin air for the title company on time.

If you go into the bank owned purchase understanding that there could be many things slowing down the process you’ll be more patient.  If you expect the impossible it will be a nightmare so don’t expect to close in 30 days, even if it’s an all cash sale.  The lynchpin person, the mystery man/woman, could cause you a migraine.  Relax and go with the flow and you’ll come out at the closing with a great buy on a house that will make your friends envious.

We’re here to help you with your real estate business.  Whether you are a buyer or a seller we are here to help you.  The Wilkas Group is experienced with bank owned properties, short sales and regular purchases.  You can reach us by email or by clicking the link to the left.

If you are lucky enough to win on an REO bid, be prepared for a roller coaster ride until it’s done, and expect a headache during the process.  Oh, I guess I’m talking about the headaches a Realtor receives, not necessarily what you, the buyer gets, that is, besides a great buy. REO’s are wonderful for First Time Buyers but remember to hang on during the process!

We’re in the middle of one right now.  Our clients are getting a steal of a deal on a 3 bedroom 2 1/2 bath home.  Wow, a great deal and a place that is generally in good shape.  But, here’s what it’s like to be in the middle of one of these deals.  No matter what your contract says, forget it.  It doesn’t really matter because the bank holds all of the cards.

We asked for a 45 day close but by the time all of the documents were signed – a 2 week process – it’s down to 31 days.  We hope the lender will perform, and I have been assured they will, but that’s a headache especially for me.  Banks get snarly in their side of the agreement if you are one minute late in closing.  They charge lots of money, even if it’s their delay.  So be prepared for the roller coaster ride as we crawl up the track.

In a normal sale, the buyer  has more protections in the contact than the seller.  Not so in an REO.  The bank rules.  But, we are not complaining.  We got the bank to pay all closing costs and pay down points, and this is worth a lot of money to a buyer.  In return my buyers will get a fabulous new home under current market value.

But the clock still ticks.  It’s been over two weeks and the escrow has not been opened up.  Reason?  It’s not a local title and escrow company.  It’s  well out of our area and market and doesn’t do business the way it is done in San Mateo County.  That’s another headache and a pause while we crawl the tracks on this roller coaster.

The lender needs a Preliminary Title Report.  I need it too, and so does the buyer.  It’s not been ordered, yet.  The clock ticks.  Headache time. We have contingencies to release.  They are stipulated within the original contract and the number of days we have is there, too.  But that’s not the agreement we’re under right now, so what clock are we on?  Roller coaster here — we’re climbing up, up, up waiting to hit the top of the track so we can release contingencies on time, or better yet sooner.  That way when we’re at the top of the track, the ride down will be smooth and easy for my buyer.

I am confident that we’ll get to the end of the ride  on time, and without too many stops along the way, but it’s sometimes a wild ride getting to the close of escrow. Oh, First Time Buyers,  this is not the usual process in buying a home, which is generally cut and dry.  But roller coasters can be fun and REO roller coasters are well worth the run.