Banks Slashing Prices to Unload Foreclosures
June 9th, 2008 categories: Disclosure, Phoenix Foreclosures
If you are looking for a deal in Phoenix and are thinking about purchasing a bank owned (REO) property in the Phoenix Real Estate Market- you may be facing or reliving 2005, the housing boom that saw multiple offers, as many as 15-20 offers for one home. 
As banks are trying to unload these homes, they are slashing the prices, which are bringing the buyers and multiple offers. So be prepared for this new round of bidding wars. The tactic, as it was in 2005, price it right and the price will be bid up.
There are some important considerations that a buyer should be aware of when buying a foreclosed home in Phoenix.
- Most if not all, are conveyed “as-is”- the bank will not make repairs, seller makes no warranty to the buyer, either expressed or implied as to the condition of the house, fitness of the property.
- The seller is still to disclose any material fact, however, since the bank did not “live” in the house- there will be no SPDS-sellers property disclosures or CLUE report which reports of any insurance claims on the property.
- Regarding the appraisal-a failed appraisal based on the condition of the home (missing A/C, mold, missing appliances etc.) will not allow the buyer to cancel the get their earnest money back. The AS_IS addendum overrides the contract, that includes an appraisal contingency. So if the appraisal comes in low, the buyer can not use the appraisal contingency- it is imparitive that the appraisal be done in the 10 day inspection period. If 10 days is not long enough, extend the inspection period when you submit the contract.
- If you are financing an REO property- keep in mind it is possible and is happening that the lender will refuse to lend on a home in which the home was unacceptable due to conditions of the home. They buyer could be at risk of losing their earnest money. The AS-IS addendum state, that the buyer must make the house acceptable in order for the lender to finance the property.
If you are buying- do your homework and make sure you have a good agent that has your best interest in mind.
I’m finding the asset companies are a little easier on financing now because they know the financing programs are changing daily but yes, it is getting harder and harder for buyers to terminate the contract and get their money back.
@susan-it is changing everyday-you really have to be very diligent and try and protect your buyer-it is a new world in real estate
Jamie,
Another concern is the utilities being off, it could take a day or two to get it on, and more time if there is a holiday in the mix, then if you choose to have additional inspections, time may run short. I suggest having the 10 day inspection extended, giving time to take a good look and not be limited by getting the utilities on.
Great post
@Irene-great point- I just ran into that problem on a short sale-we had to delay the inspection for a couple of days to wait for the utilities.
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