It's a buyers market and you're a buyer. You want the very best deal you can get. There are loads of homes for sale; over 1000 in Temecula alone. So where do you start? That question is easy. Find a good buyers agent and tell them what you're looking for. Let them do the work and present you with their findings. Chances are some of the homes they find will be bank owned homes and these are usually among the lowest priced. There will probably be a few short sales on the list also and they may see like a good deal also. But each of these presents their own set of problems.
Foreclosures
Bank owned homes are homes that have already gone through the foreclosure process and now the bank wants to get rid of them. The bank has contacted one of their agents, received a brokers price opinion and now the home is for sale. If you put in an offer on this house, make sure you have a buyers agent, never use the listing agent. The listing agent usually has an ongoing relationship with the bank and may not be completely committed to you as the buyer. So don't sell yourself short, get a good agent to represent only you.
Bank owned homes will be sold AS IS which means you can do a home inspection but the bank will not do any repairs. Most banks will have very strict time lines as to how soon you need to have your home inspection in order to back out of the deal and not forfeit your deposit. So 5 days for inspections is not unusual. The bank will want proof of funds upfront and will not approve the offer until they've seen this information. They can take several days to accept an offer so be prepared for a wait. As part of their acceptance the bank will have it's own addendum, that the buyer will need to sign. One of the conditions in the addendum will be a late fee accesses on escrows that close after the closing date. These fees can range from $100 and up and have additional per day charges as well. These can add up quickly, so get a 45 day escrow if possible with the intentions of closing in 30. This will give you sway time for unexpected delays.
Short Sales
Short sales can be deceptive. Often a short sale will read contingent on bank approval This means that what ever is in the MLS as far as price may not necessarily be what the bank is willing to accept. A short sale is where the owner still lives in the home, he may or may not be making payments, he needs to sell his house but will not be able to sell for what he owes. In a short sale the bank has final approval not the owner. The listing agent most often has arbitrarily put a sale prices (often low) in the MLS, hoping to attract a buyer and this usually works. The problem arises when the bank doesn't want to sell that low and negotiations start between the buyer and the bank. This can be a very lengthy process and the end result can often be weeks of wasted time. If you want to attempt to purchase a short sale the key is understanding it can be a very lengthy process with an outcome that is not what you were hoping for.
Whether you buy a short sale, a pre-foreclosure home, a bank owned home, or a seller owned home, make sure you have a knowledgeable agent that can work with any of these scenarios. The more complicated the transaction the more things can go wrong and the more the transaction can cost the buyer time and money. So do yourself a big favor and get a good buyers agent.
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