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Bank Owned Homes - Guarantees Not Included

Jonathan Dalton, Phoenix Real Estate Agent Here’s the gist of a discussion I had with one of buyers this weekend when discussing some bank owned homes that we viewed:

A bank owned home has been repossessed. It’s like buying a car that had been repossessed. Except with a home, you have the opportunity to have the house inspected by a professional home inspector and you can walk from the purchase if you don’t like what you see. Not so much with the car.

But here’s the thing … the bank doesn’t really know anything about the house (outside of anything uncovered during their own inspection, should they have one.) All the bank knows is that their owner didn’t make their payments and no one purchased the house at auction.

The listing agent doesn’t really know anything about the house’s history; they didn’t know the house existed until the bank called to put it on the market.

I don’t really know anything about the house’s history. All the information I have is on the Multiple Listing Service sheet, and even that information’s not guaranteed.

Purchasing a bank owned home is a gamble. But in some ways, it’s only a slightly larger gamble than with any home. Owners are supposed to disclose what they know about a property, so there’s a little more information available. But there’s no guarantee that the owner has disclosed everything.

The big difference is if something goes wrong and it was something that ought to have been disclosed, the buyer generally can go after the seller for damages. Not so on a bank owned, where multi-page addenda spell out in no uncertain terms that the bank’s not going to be liable for anything that happens.

So what’s a buyer to do if this is the route they pursue? Get a home inspection. It’s the best $300 to $400 you can spend. And then get a home warranty for protection on the mechanical systems. Some home warranty companies even are covering items that used to be denied because of deferred maintenance. Get one.

Bank owned homes can prove to be an affordable option for many, but buyers need to realize the rules of purchasing are considerably different than with homes being sold by their owners.

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Phoenix Real Estate Inventory Update: March 4

Jonathan Dalton, Phoenix Real Estate Agent The Phoenix real estate market is picking up. And if you’re shopping for bank owned homes, you had best be serious from the start.

First, let’s take a look back to inventory last year. I often tell you that inventory picks up in the spring as people get their homes on the market in advance of the end of the school year. Last year was true to the trend:

Febuary 5, 2007: 31,675
February 12, 2007: 32,254
February 19, 2007: 32,610
February 26, 2007: 32,672
March 5, 2007: 32,860
March 12, 2007: 33,539

The history lesson is helpful because last week, the number of single family detached homes in Maricopa County essentially was flat from the week before. And this week it decreased by a net 272 homes.

It’s a minor drop - only 7/10 of one percent of the inventory - but it’s a drop at a time of year where drops don’t normally happen.

Sales over the preceding 30 days rose to 2,503 from 2,286 - that an increase of about 9 percent and an increase of close to 25% from two weeks ago’s 2,022 figure.

The two add up to a 15.74-month supply of homes, which still is more than we’d like to see but is far better than the 20-month supply from a couple of weeks back.

Short sales, despite my best warnings, also have seen an increase in sales - 264 closed short-sale listings over the last 30 days with 3,726 currently active for a 14.11-month supply.

Bank owned homes remain in demand - there were 530 closed sales of REO homes against a current inventory for a 6.4-month supply. Keep in mind a 5- to 6-month supply is considered a balanced market.

As always, click on any of the markers below to see the details for an of the cities or towns here in Maricopa County. And also as always, all the data is provided by the Arizona Regional MLS and is deemed reliable but not guaranteed.

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