If you are considering purchasing a home in Big Bear, the odds are pretty good you will be looking at a bank owned home. The number of REO, Bank Owned properties for sale in Big Bear number about 10% of the total inventory and they are normally priced rather aggressively.  So, why wouldn’t you want to take a look at bank owned or REO properties?

In Big Bear, 10% of the homes listed are bank owned homes, yet they make up 35% of the homes sold. Simply put, bank owned, REO homes drive the market. In many cases, the traditional seller can’t afford to price his property at a competitive level with the bank owned properties in his neighborhood. So, for the time being, bank owned properties are getting the bulk of buyer’s attention. Because of this fact, it is very important for a potential buyer to be aware of some of the differences between purchasing a bank owned home and a traditional listing.

Bank owned properties are sold in As-Is condition. All homes being sold as resale or bank owned, REO homes are sold as is.   Unlike the traditional seller, the bank is not going to be willing to provide any repairs to the property to get it sold..  Are you preparred to buy the home "As Is"?

Expect them to change the contingency period. On the standard C.A.R. Purchase Contract, the contingency period for inspections is set at 17.  This provides the buyer with ample time to have the home inspection completed and negotiate any repair requests that are generated by the report. It also gives the seller ample opportunity to have the termite report and any section 1 work completed.  For some reason, almost every bank demands that the contingency period be shortened to either 5 or 10 days from the date escrow opens. In some cases, this means, as a buyer, you have to be extremely proactive in your inspections. I always try to time it so we get the inspection done the very first day we open escrow. This allows just enough time to get the report back and make a decision on whether to go ahead with the purchase or not.

Another thing most buyers are not aware of is that the contingencies on a bank owned purchase automatically expire on the date specified in the bank’s addendum. This differs greatly from a traditional sale where the contingencies remain in effect until they are removed in writing by the buyer. This makes it of utmost importance for a buyer to complete all their investigations in an accelerated manner.

If you are paying cash, expect them to require you put down a larger deposit.  When a buyer makes an offer on a home, the Realtor normally asks for a good faith deposit of 3%.  I have had banks come back and request a good faith deposit of 10% on cash deals.  I think it is their way of finding out very quickly if the buyer really does have the cash to put down. 

If you are an investor, or this is a second home purchase, be prepared to wait. Fannie Mae, who owns the majority of bank owned properties in this country, has just recently started a policy of making their homes more easily accessible to first time home buyers. To do this they have instituted a policy of waiting until the property has been on the market for 15 days before they will respond to any offer made by an investor or second home buyer. This gives people who are in the market for a primary residence first priority. If the home is in really good shape and listed at a good price, odds are it will be sold before investors will get a shot at it.

Lastly, be prepared to use the banks escrow and title company.   It used to be that whenever you bought a bank owned home, you had to use the escrow and title company that the bank set forward.  The laws have changed and the bank can no longer dictate to the buyer who title and escrow is going to be.  The way the banks handle this now is they give the buyer the opportunity to use his own escrow and title company.  But, if they do use their own escrow and title, they then have to pay for all title and escrow fees for both buyer and seller.  If you use the title and escrow that bank selects, then the bank will pay for their half of the escrow.  This is how they ate getting around the new rule.  They can say that they are offering the buyer the option and they are choosing to use the escrow that the bank has selected.

My normal blog posts are written so that I can discuss with you what is going on with REO”s, Short Sales, and Real Estate in general in the Big Bear Valley.  This post is going to be a little different.  The purpose of this post is to take a few minutes to think about and thank the Big Bear City Fire Dept.

I was on my way home from a very nice evening with a very special lady last night when I received a call from my daughter, informing me that the the house next to mine in Sugarloaf had caught fire.  She wanted to know if I was home and if everything was alright.  I told her that I was on Arctic Circle and I had no idea what she was talking about.  I asked her to drive by the house and see if this was a true report and if so, to please check on my house and my dogs.  In about five minutes, I received a call from her informing me that something was going on because the roads were closed and there was police and fire activity near my house.

Whenever you are on the Arctic Circle near Big Bear, you are about five miles from the dam.  My home is another 20 miles or so from the dam.  In other words; I have a ways to travel before getting home.  Thank God there was no one on the roads that time of night as I made the trip home to Sugarloaf in record time.  Upon arrival, I found the street blocked off by fire and police personnel.  I parked my truck and walked up to the fire captain to inquire about the condition of my home.  I was told that my home had been saved. The Fire Captain told me  that had the fire dept taken another five minutes to get to the scene, the outcome would probably have been much worse.  While I was concerned about the house burning, I was much more concerned for my dogs.  The idea of any of my dogs being hurt as a result of the fire was terifying.

I wanted to post this blog in order to give the Big Bear City Fire Dept. a big thank you.  Because they were able to get on scene quickly and they had the ability to knock the fire down while protecting exposed structures, my home and my dogs were saved from what would otherwise have been a very tragic day.  Thank you once again to the Big Bear City Fire Dept. and anyone else who helped save my home last night