If I were a buyer, I would much prefer to make an offer on a bank-owned home than a short-sale home. Why? When you make an offer on a bank-owned property, once they bank agrees to the terms and conditions, you can move forward to the closing knowing the transaction has been approved.
In the case of a short sale, the buyer sometimes doesn't receive a "real" answer until the bank and the seller come to an agreement - and in my experience over the last six months, there have been many times when they never reached an agreement. This means, as a buyer, you could arrive at the tentative closing date only to lose the home because they bank and seller couldn't come to a final financial arrangement.
If you're an investor or you're buying the house as a second home, it's not as big a deal. But if you intended to move into the home, you can wind up at a tremendous disadvantage should the transaction fall apart at the last moment. Your lease is up and your moving truck is loaded ... see the picture? It's not pretty, and it surely would be a very stressful situation for a family. You'd have to make quick choices about where to live for the immediate future and start looking for another home to purchase.
With both bank-owned homes and short sales, you have the opportunity to do a home inspection, with the sale contingent on the inspection. Bank-owned properties are sold in "AS IS" condition, so expect that they will make absolutely NO repairs. Since the seller (the bank) has never lived in the home, they have no real knowledge of what may or may not be a problem situation with the property. It's the old "buyer beware" situation.
This isn't to say there aren't some great deals to be bought in our Phoenix market ... there certainly are some great buys! Just be certain to hire an ASHI-certified home inspector and know up front what your added expenses may be after you close on the home. In this circumstance ... no surprises is a good thing.
Many times with short-sale properties, the seller has no money to do any repairs, so it potentially puts the expense of repairs on the buyers' shoulders. On the positive side, the seller has often lived in the home or is still living there and has full knowledge of its condition. The seller can tell you if the AC has been replaced or if there have been any plumbing problems, roof issues, etc. Always have a home inspection should buy a short sale property!
In our office we have seen a number of bank-owned properties be bid up over list price. The banks price them low, hoping to bid the sales price up. Once the word gets out to agents, they flock to the "good deals," hoping their clients win the bidding war. Sometimes it is worth it to pay over list price. YES, it's true! Can you imagine that in our market? Our buyers have been able to make their buying power go a long way with these well-priced homes. This is the perfect buying time for first-time home buyers. Finally, YOU aren't priced out of the market!
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