We just closed escrow on two bank owned sales and both were late in closing. We had everything in place yet had to wait for someone at the banks that foreclosed each of these properties to send the Deed and HUD-1 statement to the Title company so we could close. There really is no reason for this kind of a delay today. There are fewer bank owned listings around since banks are holding them off the market, and one would think that because of this, we’d see a more streamlined process but we’re wrong.
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.