RealtyTrac estimates that only 15 percent of the 629,000 bank-owned properties are currently listed for sale. Even at that low rate, some banks are slow to process the few sales offers they receive. Buying a house from a bank is different in most states than buying from a private party. Typically, it takes longer to receive acceptance or counter offers along with a longer period to close the deal.
The bank executives making the decisions are not emotionally attached to the houses the way your average seller is. They don’t spend the day pondering whether to accept or counter the offer that a buyer puts on the table. They look at an offer to compare it to other offers that have been received. REO is priced to sell. It’s becoming common to have bidding wars on these properties. When multiple offers come in, the bank may decide to hold off making a decision in hopes that a better offer will come in. You can try to force their hand by putting a deadline on when they can accept or counter your offer.
If the bank is not located in your state, chances are high that once they accept an offer based on your local customary real estate contract, they will add their own contract as an addendum. This slows the purchase process as they pass your purchase offer to the bank’s contract department to be rewritten.
According to RealtyTrac, bank-owned properties that sold in the second quarter took an average of 195 days to sell from the time they were foreclosed, up from 178 days in the first quarter. However, this varies greatly depending on the bank and state. For instance, New York State takes the longest, averaging 430 days. Followed by New Jersey at 354 days.
The better news is that Fannie Mae, Freddie Mac, and the big national banks have streamlined their REO selling processes. There are no specific numbers available. However, if you are looking to invest in foreclosures and want a deal that closes reasonably fast, you are better off seeking out REO owned by one of the big banks or one of the government agencies.
All the Best,
Peter Vekselman
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