I have heard that Wachovia (now Wells Fargo) took a different approach to bank-owned properties. They would fix them up for sale.
I have now experienced them. There were two properties in the same complex – one was owned by Wachovia and the other another bank.
The unit my client is purchasing was painted, had new carpet and a new stove, all the tubs were newly caulked! The other, which really is a typical REO (real estate owned) property, needed paint, the flooring was worn and the bathtub had mildew around the edges. The funny thing is the latter was priced higher than the one my client chose. The properties only doors away from each other and the same exact floor plan were like night and day.
What are some things to do or general warnings if you decided to buy a foreclosed property?
1) Get a full battery of inspections. Be at the inspections if possible to ask questions.
2) Get a home warranty. If there are unknown conditions then you can get coverage on many items with one of these. The deductible is around $50 per trade so it is well worth the investment.
3) Lenders will typically try to shorten up inspection periods and loan contingency removal time periods. We could have lost our sale – there were 3 offers on the townhome – but if we could not perform in a timely fashion my client would have had to pay $1000 for each delay!!! So you have to decide how far you are willing to accommodate the seller and where to draw the line. We countered longer times and because the offer was strong we won out!
4) If possible see if the listing agent has pictures of the place before it was cleaned up and repaired. We waited until it was in contract then asked. I sort of look at this information as a disclosure item for the listing agent.
5) If the property is a common interest subdivision you may wish to get an association document review. Let’s someone with some understanding of budgets and HOA docs decipher the data.
6) The seller will sometimes ask for a number of days to review the final signed escrow papers so be sure to get a long enough lock on your loan so you don’t run into trouble.