While bank owned homes and foreclosures are a much smaller part of the Colorado Springs real estate market than they used to be, these properties are still often available for sale. Many people are looking to buy a bank owned home or foreclosure in Colorado Springs because they sense an opportunity for a good deal.
However, many people don’t understand some of the differences and nuances between a home in foreclosure and a bank owned home. Let’s discuss.
A home in foreclosure is still owned by a human, by the homeowner. However, that homeowner is behind on their mortgage payments – they are in default. Their mortgage company (or bank) has started the foreclosure process, but it has not yet completed. Most likely, there is some date set for the foreclosure auction. The homeowner can either catch up on their payments, sell the home, or let the foreclosure process proceed.
A bank owned home is no longer owned by a human. It is owned by a company, by a bank. The foreclosure process is already done and dusted. The owner is the bank.
There is a big difference between buying a home in foreclosure and buying a bank owned home in Colorado Springs.
If you’re looking to buy a Colorado Springs foreclosure home, chances are it will also be a short sale. That means the owner owes more on the house than they can sell it for, and they have to get the bank to agree to take less than they are owed. This can take for-ev-er. Like, super long. If you put in an offer on one of these homes, expect to wait several weeks to find out if the bank will accept your offer. And then expect to wait many months – sometimes 6 months or more – to close on the home.
Additionally, the bank really wants every last penny it can get. They’re already agreeing to take less than they’re owed, so they’re not interested in giving home buyers a huge discount. The chances of getting a “great deal” are not huge – and you need the patience of Mother Teresa for the sale to complete.
The good news about these homes is that the homeowner is usually still living there and they are in relatively good condition. The homeowner may not have the cash to make repairs, but since they live there, it’s probably in reasonable shape.
Bank owned homes in Colorado Springs, on the other hand, can be far better deals and can take SO MUCH LESS TIME to purchase. Why is this, you ask? Well, at this point, there’s no chance that a homeowner will make up back payments. They have no recourse against anyone. The house is just a big ‘ole liability at this point. The bank owns a piece of property and they would vastly rather just hold loans, not property. They generally want this house sold and gone, and quickly.
Although bank owned homes tend to accept far lower offers and have quicker close times, the houses can be in minor to very bad condition. Some former homeowners take out their frustration on the property. We’ve seen houses with holes in the walls, massive flooring stains, random paint splashed everywhere, kitchens destroyed, no appliances, no fixtures… on and on. The bank, to limit their liability, does not want to make repairs. So if there’s damage, you’ll generally have to fix it yourself after the sale completes. Most often, what you see is what you get.
Make sure you know what you’re getting into when you’re looking for a great deal in the Colorado Springs real estate market! Hire yourself a competent Realtor to represent you in your purchase of a foreclosure or a bank owned home.
The banks have heavy hitters to negotiate on their side – make sure you have the same support and representation on yours!
We’ve helped a ton of buyers – and sellers – with foreclosures, short sales, and bank owned homes. We know the ins and outs of these transactions. If you’re considering buying a bank owned home in Colorado Springs, give us a call to put competent, experienced representation in your corner!