Are you considering buying a Carson Valley bank-owned property but have reservations and concerns about buying a property in “As-Is” condition?
REO means real estate owned and is the common term for bank owned property. Buying a Carson Valley REO can be an easy process not unlike a typical traditional purchase. The ease at which the transaction is accomplished can be directly attributed to the listing and selling agent’s willingness to work together to overcome obstacles.
Carson Valley Bank Owned Homes (or REOs) are usually sold in “As-Is” condition meaning that the Seller is unwilling to make repairs to the property. When we do our brokers price opinion that is used by the Seller to help determine the selling price, we list repairs that we discover. The Seller evaluates the cost to repair versus the gain in value attributed to the repairs. Most often the Seller chooses to sell the property “As-Is”. On the other hand we have seen some of our Sellers choose to make the repairs before the property is listed for sale. A property in average condition for the neighborhood will sell closer to the asking price and in a shorter amount of time than a property in fair or poor condition. One of the categories for the price recommendation is “lender required repairs”. It is here that we list repairs that we know a lender will require to fund a loan for the property. These are usually health and safety issues that might be present at the property. For example, if a handrail for a staircase was missing we would estimate the cost to repair. If the roof was a shake roof and not serviceable we would estimate the cost to repair. If the house was missing a range we would also estimate the cost to repair. The cost to repair is totaled so the Seller has an idea on how much they might have to spend to market the house in repaired condition which would bring it up to average condition for the neighborhood. We also make an estimation of who the most likely buyer will be. If we estimate that it will be an investor the Seller may choose not to make any repairs. If the estimate is an owner occupant or first time home buyer the Seller is already aware of what repairs may be required for a loan that the buyer will need. Usually Sellers choose not to repair prior to listing. Knowing that the purchase is contingent upon the funding of a loan the Seller may wait until the buyer has done some due diligence (inspections) and appraisal before choosing whether or not to repair. If the appraiser names items that must be repaired prior to final loan approval then the Seller is likely to agree to have the repairs done.
The enthusiasm and willingness of the agents to work together to make the case to the Seller regarding lender required repairs can make or break the deal. The burden usually rests with the listing agent to obtain bids from licensed contractors, submit the bids to the bank and organize the work. Generally the listing agent pays the vendors and submits to the bank for reimbursement.
Having listed and sold many Carson Valley REO homes, we have never lost a deal because the bank was unwilling to make lender required repairs once the repair list has been identified by an appraiser. So, just because the contract calls for the property to be sold “As-Is” doesn’t mean that the bank will be unwilling to make some lender required repairs. If the buyer needs a loan to close and the appraiser calls out repairs the repairs will need to be accomplished before the deal can close. Usually the contract is contingent upon the loan approval.