Are you shopping in the distressed aisle for your McCormick Ranch home? Make sure to look up.
While the purchase of a bank owned home or a short sale tends to be fraught with a little more risk than a traditional resale transaction, it is important to note that buyers typically maintain inspection rights on distressed properties. While the various “As Is” clauses and addenda dictate that the seller is not responsible for making repairs on these properties, most purchases involving bank properties do allow for an inspection period (though the time frame may be shrunk from the typical 10 days allowed under the boilerplate of the standard Arizona Association of Realtors contract).
*In short, the bank won’t likely fix anything, but you are allowed to verify condition before deciding whether or not to continue with the transaction.
During the course of your inspections, it is always prudent to spend a little extra time on a bank property as there are no disclosures of prior defects. The institution that now owns the property never occupied it, and knows nothing about its history other than the pertinent fact that the previous owner defaulted on his/her deed of trust.
It’s all about the Benjamins to the bank.
The purpose of this lengthy preamble? To add a little context to the freak hail storm that struck large pockets across the Valley last (2010) fall. If you have been watching all of the new roofs going up over the past six months, you know that the McCormick Ranch area was hit hard. With insurance companies passing out full roof replacements like they were candy, it is not uncommon to see streets where virtually every home features a brand new roof. Foam and asphalt shingle roofs, in particular, took wicked beatings.
So while most owner-occupied properties in the area that sustained damage have been repaired or replaced, the bank-owned properties that have been sitting vacant for over a year are likely to leak like a sieve when the monsoons roll around this July. The price points of such properties are often attractive enough to offset the 10-20k many will need, but it can be tough to swallow when it is not an anticipated cost.
Before plunking down money on inspections and appraisals, I’d recommend having a professional walk the roof of that bank owned steal to help you determine the true out of pocket price of ownership.
Oh, and if you are buying a resale property in McCormick Ranch? Make sure to find out if the seller had any repair work performed in the aftermath of said storm. While one of our selling clients was able to obtain full roof replacement on a claim from that storm as recently as this past month, the likelihood of that happening on another property dwindles the further removed we get from the event. The insurance companies aren’t going to be in the roof replacement business much longer.
Ray & Paul
Buying or selling a home in the McCormick Ranch area? Give us a call. Online data and pictures can give you 90% of the picture. We’ll fill in the remaining 10%.
*Do not rely on any general statements herein as legal advice. We are not attorneys, nor do our statements pertain to a specific transaction. Rights and restrictions within a transaction vary depending upon the documents used, attendant verbiage, alterations, etc. Long disclaimer short: I ain’t talking about your deal, homie.
Standard Addendum to Purchase Contract
Purchase Agreement for a First Bank of Asbestos (henceforth referred to as “Seller”) property is non-binding unless this addendum has been attached and fully executed by all parties. In the event of a dispute between the language of the Purchase Agreement (or subsequent addenda) and this addendum, the terms of this addendum shall prevail. Under no circumstances shall the terms of this addendum be altered by any party other than Mephistopheles himself.
Buyer, ______________________________, understands that the property located at _____________________________ in _______________________, _______ has been acquired through foreclosure (or similar jurisdictional process) by Seller. As such, Seller has no knowledge of the property’s history and makes no warranties, express or implied, as to its condition.
*Buyer acknowledges that Seller doesn’t know s&$% _________ (Buyer Initials)
In the unlikely event that Seller should learn anything about the condition or history of the property at any time during the course of the transaction, Seller still doesn’t know s&$%.
Buyer to include child’s pet bunny rabbit with all offers. Upon verbal notice of Seller’s acceptance of the Purchase Agreement, Buyer to deposit earnest funds in the amount of $1,000,000 in non-sequential bills in the offshore account of the Seller’s choosing. Should Buyer fail to deposit earnest funds within twenty four (24) hours of verbal acceptance, the rabbit dies.
Upon delivery of earnest funds, Buyer to be granted fifteen minutes to complete all desired physical inspections of the premises. Should Buyer require utilities to be turned on prior to inspection, Buyer may do so at his/her expense if he/she can properly name the tune of the Seller’s choosing in three notes. Should Buyer request any repairs be completed prior to Close of Escrow, Seller reserves the right to cancel this transaction, retain the earnest funds as damages and drop the Buyer off in the middle of the desert wearing a blindfold and bologna underwear.
*Buyer acknowledges that Seller won’t fix s&$% _________ (Buyer Initials)
In the event of a financed offer, Buyer to obtain full loan approval within ten seconds of execution of the Purchase Agreement. Close of Escrow to occur on a date convenient to Seller. Possibly next June. Maybe September. Seller to notify Buyer of the Close of Escrow Date on the day of closing. Should Buyer fail to perform, causing the closing to be delayed, Seller reserves the right to cancel this contract without further notice or grant an extension to the Buyer at a penalty of $100,000 per day. In the event that Buyer does not possess sufficient funds to meet these terms, Buyer may elect to name Seller in his/her Last Will and Testament and/or as sole beneficiary of the life insurance policy taken out in the amount owed.
*Buyer acknowledgement to “Watch your back, Jack.” ________ (Buyer Initials)
Upon successful Close of Escrow, Buyer agrees to be placed on the First Bank of Asbestos mailing list to learn about exciting new products and promotions before anyone else. Removal from our “Happy Homeowner Database” or enforcement of the provisions set forth in the National Do Not Call List Registry will result in Buyer missing out on special deals and helpful new homeowner tips, but participation is completely voluntary. Buyer is free to waive monthly subscription to “Understanding the Home We Told You We Know Nothing About” newsletter at any time.
*Buyer acknowledges that we still have the bunny. _________ (Buyer Initials)
We thank you for selecting a First Bank of Asbestos home and look forward to denying your refinance application in the future on the grounds that there may or may not be a leaky underground missile silo on the premises that we don’t know s&$% about.
First Bank of Asbestos Representative Date
With the latest scuttlebutt in the housing industry centering around a rising political push for a large scale foreclosure moratorium by leading lending institutions, most are aware that Bank of America became the first to issue a temporary nationwide pause in foreclosures this past week. Though B of A is the first to stay their executions across all fifty states, JP Morgan Chase and GMAC agreed to halt foreclosures in the 23 states where foreclosure is a judicial process. The pressure to do so originated over procedural impropriety in several specific locales, and has snowballed into wholesale questioning of the internal processes of the major banks. Mounting concern over erroneous foreclosures spawned the voluntary cessation (expected to last several weeks). While Wells Fargo has spurned calls to do the same, it would not be surprising to see more institutions yield to the rising pressure and follow suit.
What does this mean? Plenty has already been written about this with homeowners facing foreclosure and prospective buyers in mind, so I won’t belabor those perspectives here. Suffice it to say that while any additional quality control that can prevent people from wrongly losing their homes to foreclosure would be a good thing, the upshot in terms of market reaction is likely to be a collective shrug of the shoulders. Not content to simply halt the actual act of foreclosure, B of A is temporarily taking their inventory off the market while the review is ongoing. It’s been posited that fewer listings will translate to a possible surge in prices, but this is pure mularky. The market simply does not react in a matter of a few weeks to any stimulus, as it takes time for consumers to make heads or tails out of new developments and how they translate to negotiable strength. On the contrary, I think this will make buyers who are already non-harried take even more of a wait and see approach. Rather than buying what is left, those who are not under a time crunch to get into a new house will probably just wait for the moratorium to end and for the withheld inventory to flood the market. In essence, we could be looking at an unintentional buying moratorium as well.
Though it would be foolish to anticipate a surge in values, the one segment of the consumptive spectrum that stands to gain from this turn of events is the non-distressed homeowner. With a small window opening for mom & pop home sellers to compete with significantly fewer bank homes for buyers, I would not be shocked at all to see a percentage gain of resale home sales while overall sales volume remains flat, or even declines slightly, in the coming weeks. I expect many buyers will choose to wait it out, but there are those who do not have the luxury of time. Be it a job relocation, family circumstances, etc, there are always buyers who need to buy now. With fewer distressed properties on the market, and likely buyer uncertainty over how this will translate to the short sale arena (will B of A process short sales while foreclosures are in limbo, or pause all such decisions? Will short sale sellers temporarily remove their homes from the market in anticipation of a reprieve?), this could be the traditional seller’s best opportunity to vie for buyers in quite some time.
Again, don’t misconstrue the knee-jerk hypothesis. The value of your home is not going to spike due to this temporary phenomenon, nor are you suddenly in the catbird’s seat. For those in an equitable position to sell, this window merely represents the best possibility to attract a buyer in months.
No screwing around – price your home right and get it sold while there are fewer alternatives for buyers. As a regular seller, with the tax credit gone as a buyer incentive and microscopically low interest rates and low prices not translating to appreciable gains in sales/values, you have to leverage every conceivable strength in this market to accomplish your goals.
Ready to sell your Scottsdale home? Contact us today to schedule a no-obligation consultation, but do it fast. When the moratorium ends and the holidays are fast approaching, it will be time to hunker down for another long, cold winter.
Interested in foreclosure homes? You’ve come to the right place. The Scottsdale Foreclosure Hotsheet brings you the latest bank owned property listings to hit the market. Follow the link below for daily updates of the latest Scottsdale bank owned foreclosure home listings.
New Scottsdale Foreclosure Real Estate Listings
While there are deals to be had in the foreclosure arena, buying a Scottsdale bank owned home can be a tricky business. With scores of investors lined up to bid against you for the best bargains, an absence of property disclosures, “As Is” purchase requirements and the financing challenges inherent in the current economy, locating a suitable candidate is less than half the battle.
Don’t go it alone.
Call on Ray & Paul to guide you through the entire process. With nearly 50 years combined years selling Scottsdale Real Estate, let us bring that hard-earned experience to bear for you.
Ray and Paul Slaybaugh