Outer Banks Foreclosures, Short Sales, Bank Owned Properties and Houses
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OBX Foreclosures For Sale
Here on the Outer Banks there are foreclosure properties for sale listed in the Outer Banks MLS the same as any normal, private-seller property listing would be. Bank/sellers list their foreclosure properties with a local brokerage firm the same as all private sellers do.
OBX Foreclosure purchases are quite different than normal properties, though, and they are not for the squeamish...but they can be great deals for buyers. Following are some pointers if you are considering a foreclosure property on the Outer Banks.
Some foreclosure properties sell for full price, many sell for "pennies on the dollar." How low a buyer can get a bank/seller to go on price can depend on the popularity of the property. It doesn't matter if the property is priced at $200,000 or $2,000,000--if buyer interest/showing activity is high and it hasn't been on the market for long, a buyer should not expect the bank/seller to look favorably on a low-ball offer.
If the foreclosed property already has a bargain price on it, odds are the bank will get their price (or close) and a low offer won't work. On the other hand, if the property has been on the market a long time without much buyer interest, it's possible the bank wants that property "off the books" and will sell it at a steep discount.
Always remember that the land beneath all Outer Banks foreclosure houses still has value and the bank/sellers know this fact. Go here for more on Outer Banks Foreclosure Pricing.
Working With Banks
Be prepared to be patient and be prepared to act swiftly all at the same time. Banks move at their own pace and nothing can be done to speed them up. Some work very quickly, though--it depends on the Asset Management company administering the sale for the bank/seller and how much work is piled on that AM's desk. When it is your turn to do something you can expect to be required to move very quickly, either way, so be prepared. Conversely, expect delays from their end and you won't be disappointed.
All contracts on foreclosed properties will have some type of addendum(s) supplied by the bank that the buyer will be required to sign. These addendums usually relieve the bank of any responsibility for anything and give the buyer a short time to have all inspections completed. Once the home inspection is completed the buyer has the choice of buying the house "as is" or walking away and getting their earnest money back. Expect to sign these addendums if you want to buy a foreclosed house!
Some banks will not look at an offer until it has already been negotiated verbally. Once a verbal agreement has been made between both parties the buyer puts it in writing, including the addendums, and submits it in writing. This verbal contract acceptance is not binding and the risk for the buyer is if a better offer comes in during this process the bank will forget you ever existed and sell the house to the higher/better offer. Be prepared. Typically this inspection period is 5-10 days. We assist the buyer with the inspection process.
All of the deadlines in a foreclosure contract are "time is of the essence" so be prepared to have your lender, home inspector and termite inspector ready to go. We assist in this part of the process as well.
Here are some sample addendums we have from previous transactions. These may or may not be similar to the one the selling bank is using in your foreclosure deal. Use these sample banks addendums just as a reference to become more comfortable with the procedure so when you have less than a day to initial and sign 14 pages of addendums you won't panic.
Go here for more on Outer Banks Foreclosures and the Bank Addendums.
Cash is king. Banks typically will take a cash offer over a similar offer contingent on a loan. Sometimes they will even take a lower offer because it is for cash. We would suggest having ready to accompany an Offer either (1) a strong pre-qualification letter from a reputable lender; or (2) even better is a pre-approval letter from a lender; or (3) the best would be a proof of funds letter for a cash Offer. We highly recommend using local mortgage brokers because out-of-town lenders usually create problems during closing.
Earnest money deposits are typically held by the bank/seller's brokerage firm on foreclosures, not the buyer's brokerage firm. Go here for more about financing your Outer Banks foreclosure purchase.
Be ready to move fast. There are not as many Outer Banks foreclosures happening compared to other parts of the country so when a deal shows up it doesn't last long. If you receive an update with a price reduction or a new listing on a foreclosed property might be a deal then you can be sure you are not alone.
Foreclosure properties in our MLS usually have wording in the remarks such as "owner of record," "bank owned" or "corporate owned." The word "foreclosure" will not always be readily evident in an MLS listing designed to reach the general public.
Banks usually transfer foreclosed properties with special warranty deeds or a similar conveyance which transfers the bank/seller's interest in the property over to you the buyer. All real estate closings here are handled by attorneys so you will have your own attorney watching out for any problems with the deed.
When a home owner can no longer afford the mortgage payments they sometimes ask their bank to let them sell the property for less than what is owed on it. Sometimes the bank will agree to this and the property will be sold in what is called a "short sale." The lender takes a loss on the property while saving the expense of foreclosure and the seller doesn't have a foreclosure on his credit report.
Short sales don't always go through. These lender organizations are so large the foreclosure department does not know what is going on in the short sale department. Sometimes the agent and the seller have not communicated with the bank through the proper channels and the short sale has not been pre-approved by the bank thus endangering the sale. Or the seller finds out they will be getting a 1099 on the amount of loan forgiven and they refuse to cooperate. Or there is a second mortgage no one knew about and these second lenders rarely ever cooperate with a short sale and they always 1099 the owner. Most short sale properties go into foreclosure and then sell in the MLS with the bank acting as the seller. This is when the real deals can be found. More about Outer Banks short sales.
The typical foreclosed home does not have any appliances and will be in immediate need of some very generous TLC. You can also expect to need new carpet and interior paint after a serious cleaning. People losing their homes give up taking care of them long before they leave. The more distressed properties might need heat pumps, doors, walls, door knobs, drawer and cabinet pulls, water heater, light fixtures and ceiling fans, or possibly even plumbing or wiring components.
Expect to see some nasty foreclosed homes.they have usually been "trashed out" by a preservation company, but often they're still in much need of attention. Bank owned homes are sold "as is" and the buyer will be expected to fix any problems. There will not be a property disclosure accompanying any foreclosed property. The Buyer is supposed to use the inspection period to decide if any necessary repairs are more than they want to deal with. Got here for more about Outer Banks foreclosures with extensive repairs.
Foreclosure Bus Tours
There was an ad for Denver foreclosure bus tours. They were trying to get a bunch of buyers who are willing to pay to be herded onto a bus and driven around to foreclosed homes. Which foreclosed houses you see will depend on the arrangements set up by the tour guide, without taking into account your personal wants and needs. Hopefully, the crowd of potential buyers will generate enough excitement to instill the buying bug in everybody.
Why would a buyer want to get herded around on a bus and look at foreclosures which meet the guidelines of the foreclosure tour agent when you can get driven in a real estate agents car and see only the properties which match your requirements? So far there are no foreclosure bus tours happening on the Outer Banks and I don't expect to see them start happening anytime soon.