Putting the Stereotypical Notion of a Tightwad on its Tush

Buying a Bank-Owned Home Requires Infinite Patience

by Andi B.

So I just wanted to keep you guys updated, since you’ve been so gracious about hanging in there with me. Putting an offer in on a bank-owned home is an exercise in patience. Even though they expect you to respond to any issues within 30 hours, they take two weeks to think about anything you send them…and then they think about responding.
Two weeks after we put in an offer, we received a pretty pitiful counteroffer, but we took it because we were in competition for limited government funds for a down payment assistance program. It was a great little cottage on a third of an acre. It needed a roof patch, the floors refinished, but that was what the special program was about; the county would have contributed funds as part of a 0% loan, deferred until the sale of the property.
I actually got excited about the house. Big mistake. Within ten minutes of the county inspector coming to look at our house I knew we were done. Apparently any lead paint has to be completely abated in the strictest of standards. Any wood that had lead paint on it would have to be removed, from the window trim, to the built-ins, to the kitchen cabinets, to the siding. It would have been cheaper to completely rebuild the house.
So we had to walk away. As wonderful as the house was, as excited as we were about making a life there, it was no longer economically feasible. We could have spent a couple hundred dollars to confirm there was or wasn’t lead, but at some point you’re throwing good money after bad. Don’t worry, we were within the inspection period and will be receiving our earnest money back shortly.
The frustrating part for us was the time we wasted. We literally spent almost a month trying to get into a sales agreement to have it fall apart in 10 minutes. However, I shall not be deterred!
So we went looking again and found a different house. I could have been a snob and refused to look at this one because it’s a manufactured home, but it’s a really incredible property. It’s in a highly desirable area, closer to our family, work, and church. The bank will get our offer on Monday, so keep your fingers crossed. Hopefully we’ll be in our new home by June, whether it’s this one or another.
This deal can still go down in flames, too. As a manufactured home, it needs to have a special certification for lending. The hardest part about this whole process has been trying to find a house that we like without getting attached, especially because I want to picture us living somewhere, fixing things up, having barbecues and parties, but if I do, I risk severe disappointment.
Infinite patience, I’m telling you.

2 Responses to Buying a Bank-Owned Home Requires Infinite Patience

  1. Thanks for a very eye-opening post.

    Just revisited BlogHer after creating the account some while ago. Still finding my way around and am glad I stumbled on your blog 😉

    I'm wondering if buying a "bank owned home" is the US equivalent of our "mortgagee auction" system(?)

    The mortgagee auctions is where the bank repossess a property for not paying the loan back to them, then sells the property at an auction. For obvious reasons these are very popular, so an auction often means you don't necessarily get a low priced house.

    Even with the pitfalls, the US system sounds interesting. Now that you got my curiousity juices stewing I'm hoping you could be bothered posting a bit more about the general process for us uninitiated Aussies 😉

  2. @Avatara: I'd be happy too. I was thinking about doing a series on home-buying in the post boom era. We've encountered a lot of new unexpected rules.

    From what you're describing a mortgagee auction is one of the steps in our foreclosure process. Once someone's in arrears for a period of time and a foreclosure certificate is obtained (there are several methods by which this occurs) the property can be put up for auction. If no one purchases the house out of auction, the property reverts to the bank and the bank can sell it through a standard real estate process.

    The house we're attempting to purchase has gone through this process.

    I'll try to post a more in-depth look at the process for you. 🙂

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