3 Things To Know About Buying a Home Through Power of Sale
So, you’re out for a stroll, and you notice a nice home with a for sale sign. After taking the time to do some research and potentially viewing the property, you find out that the bank is selling the property. What does that mean for you? Often, banks will sell residential properties when the homes previous owners are unable to make their mortgage payments. In order to recover the money they loaned, the bank takes over ownership and sells the property. Sales of this nature can have definite advantages and drawbacks. Here are a few things that you ought to be aware of if you are considering making an offer on a home for sale by a bank.
There is No Guaranteed Discount
It is not uncommon for buyers to get excited when they find out that a property they are interested in is for sale through the bank. In cases like this, oftentimes, buyers assume the bank is desperate and will accept any price. While this can be true to an extent – banks are eager to sell the property and get their money back – they are also looking to sell the property at a fair market value. If the property is not in great condition then there is a good chance that there will be a lower price, however, if the house is in good condition than odds are the bank will only accept a fair offer for a property of that condition.
Power of Sale is Generally a Faster Process than Foreclosures
It is not uncommon for Power of sale and foreclosure transactions to be compared and mistaken for one another. In fact, many people tend to think that they are the same. The reality is that a Power of Sale can usually be completed within a 3-4 month timeline, whereas foreclosures can take up to a year to complete. Because of the increased timeline, banks generally prefer Powers of sale to foreclosures because it enables them to get bad loans off their books as quickly and if necessary they can immediately sue the original borrower for the money they are missing.
A Thorough Home Inspection is Crucial
While some homes that are sold through Power of Sale are in great condition, there are times when property owners who are unable to pay their mortgage are also unable to pay for proper property upkeep. For this reason, having a thorough home inspection can provide you with peace of mind and verify that the home is in working order and if there are any issues, you know exactly what you’re getting into, should you decide to go through with the purchase. A home inspection can also be useful in dealing with any of the above-mentioned clauses – as a home inspector can verify the room sizes and the condition of the home. Should the condition not be habitable, or there be a lot of renovations needed in order to make the property safe, your real estate agent can use your home inspection as leverage to lower the price should you still want to go ahead with the purchase.