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More Rules for Buying Bank Owned Homes in Orange County

Posted by Leslie Eskildsen on Thursday, October 2nd, 2008 at 7:45pm.



Be sure to read about Rules 1-4.

Rule #5: Don't get charged for the Bank's delays

When negotiating the purchase of a Bank Owned property in Orange County, the Bank will almost always insist that you to agree to pay for any delays in the close of escrow that are caused by you. The charge will be in the form of a "per diem" amoun, typically around $100 to $200 per day.  The amount can vary widely based on the value of the home.  This agreement ensures that the deal closes quickly, which is one of the key goals of the bank when selling an REO, but you must be aware that it is also likely that the Bank may be the one who causes any delay.  On a recent Bank Owned transaction, it took the bank 3 weeks to find the deed to the property, caused a chain reaction of delays in other activities necessary to move forward.  You certainly don’t want to get hit with daily charges that are not your fault.  If there is any in delay the close of escrow on your purchase of an Orange County Bank Owned home, work with your Realtor to clarify what the implications are to you and to advocate for a fair accounting.

Rule #6:  Don't let your loan lock run out

Our next tip is also related to delays in the close of escrow - a potentially devastating result of not anticipating the impact on your loan.

Once you have a fully executed contract, you will work with your lender to lock your interest rate and loan terms.  It is critical that you ensure that the period for which your loan rate is locked provides enough buffer to guarantee the rate even if there is a delay in closing.  For example, if escrow is scheduled to close on the first of the month, and your loan lock covers you through the same day, any delay in closing means that your rate is no longer guaranteed a few days later when the deal closes and the loan is funded.  Always let your lender know up front you are buying a bank owned home, so they have all the information they need to set the term of your loan lock based on the close date. You want to give youself some pad in case of delays in closing.  If the escrow does not close before the loan lock expires, you will have to pay to extend the lock or accept a potential increase in the interest on the loan - regardless of the cause of the delay.

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