Buying a Bank Owned Home in Orange County

I have been getting a number of calls or emails from buyers who think they want to buy a foreclosed home. After I ask them why they would want to do that, I usually hear "Because I want to get the most for my money and I've heard that foreclosures can be a real bargain."

Fair enough answer. Many buyers believe there are lots of bank-owned homes just waiting to be bought for 35% - 50% of market value. But here is what you should really expect :

• If the property is priced well, you will be in competition with many other buyers, and it will probably sell for over the list price, after you and the other buyers have submitted your "highest and best" offer.
• The bank will have a very one-sided contract - you will have to cool your heels and wait, and wait, and wait for them to get the contract back to you in writing, but then they will want you to remove all of your contingencies ("escape clauses") very quickly.
• You will be buying the house in "AS IS" condition, even though you won't know what the condition is until you pay an inspector* to examine it in detail.
• If you find that the cost of repairs will exceed your budget - too bad! They will very rarely re-negotiate the price or give credit for repairs. Your choice will be to cancel the contract, or spend more than you had originally expected.

*Make sure you find an experienced and thorough inspector! The seller (bank) really has no idea what may by right or wrong with the house and you will have no recourse if big problems reveal themselves after closing!