Buying a Resale Home
Resale, or pre-owned, homes abound throughout the Valley. In today’s market, you’ll find three predominant types of processes:
- The 'Traditional' sale, where buyer and seller agree on price and terms and close escrow
- A 'Short Sale' wherein the seller owes more on their loan than the property is worth. In this case, the buyer and seller would agree to price and terms, but the seller then must gain approval from their lender to accept less than their loan amount.
- An 'REO', or real-estate owned sale, is one in which the home has been foreclosed by the bank, and the bank is re-selling the property.
Traditional sales tend to be the most straightforward and can close escrow fairly quickly. Short sales will take additional time, since the bank must approve the contract terms and verify that the seller has a valid reason for 'selling short'. A Short Sale can take from 30-180 days or more to gain bank approval and move toward close of escrow. REO, or lender-owned, home sales can be quick, since the bank already owns the property and has probably established the sale price in advance.
A fourth option is to purchase a home at a Trustee Sale. This is the point at which a bank is foreclosing on the property, but will sell it to the highest bidder who offers a price the bank feels they can accept. Trustee sales are very popular with investors, but do require that the buyer pay cash for the purchase within 24 hours of the sale.
Keep in mind that in the case of Short Sale and REO properties, the home is usually sold in 'As Is' condition, so no repairs will be done by the seller, and you will receive no warranties that major systems (like air conditioning or heating) will be in working order.
When purchasing a resale home, consider buying a Home Warranty plan. A Home Warranty will cover the cost of repair or replacement of most major systems within the home for a period of one year after you purchase. The cost generally runs $500.00 to $750.00, but can save you a significant amount if just one major system (like your air conditioner) malfunctions. There is a service charge for a repair person to come investigate, but it is usually $55.00 to $75.00. The cost of the home warranty is negotiable, so you can request that the seller purchase the warranty for you.