Here’s where things stand on the bank owned home front …
FHA buyers are making up an increasing portion of the Phoenix real estate market’s pool of buyers. Even buyers who could qualify for a conventional loan often are looking at FHA financing because of the lower down payments that are required – typically only 3% of the purchase price.
FHA also is the virtual last bastion of 100% financing thanks to programs such as Ameridream, where sellers can make a gift to a third-party non-profit that then is passed on to the buyer.
But here’s the catch with FHA: FHA is fairly particular about the condition of the property. And there’s the rub. Because the bulk of homes being sold right now are bank owned homes, where the biggest question mark is condition.
Simply put, many bank owned homes can’t be sold to FHA buyers in the condition in which they’re left by their departing owners. And this leaves the bank with a decision – try and sell the home to the few rather than the many, or spend the money on paint, carpet and rudimentary repairs and access the largest possible pool.
In other words, banks are having to think like sellers and not just monoliths transferring property ownership with virually no work required.
Bank owned homes still are a gamble in as much as there’s no telling the condition the home will be in, cosmetically and structurally. But the steady push of the irresistible force that is FHA financing in today’s market is slowly causing the unmovable object – the bank’s REO department – to move in the buyers’ favor.
[tags]Phoenix real estate, FHA financing, bank owned homes[/tags]