My husband and I have a pre-approval for a home loan. We looked at homes and found one we love, its a foreclosure though, so thieves have already taken the air conditioner, water softener, appliances, and fixtures. Additionally someone punched holes in one of the walls and one of the windows is broken. Our loan will not cover it as it isn't move-in ready, but we really love the home and it is well below our mortgage amount. Our real estate agent is pushing us to let him have an investor/hedge fund buy the house, make it move-in ready and then sell it to us. We are afraid of how fishy this sounds and also afraid that it will end up costing way more than if we fixed it up ourselves or just buy a house that is move-in ready (hard to do in Florida). USAA set us up with this agent so he should be trustworthy, right? Has anyone ever heard of this idea before and/or does it sound legitimate and safe?
A foreclosure is called, "Bank Owned" and is not a short sale.
Bank Owned properties are usually repaired to pass code for occupancy and close within 60 days depending on your processing time for a mortgage.
Short Sales take much longer and are sold in a "AS IS" condition.
After the contract is agreed upon by the owner/seller, the package for processing is sent to the bank to begin vetting the seller to make sure there are no assets or income to pay the mortgage payment. Once this is completed, the bank then reviews the contract and has a "BPO", Broker Price Opinion completed to make sure that it is sold at current market value. If the contract price is too low the bank will go back to the buyer's agent, and/or buyer, to negotiate the price higher. After the price is agreed upon it goes through another month or so of processing and approval. The entire process can take from 90 to 400+/- days.
Another risk of losing the property is that the bank can foreclose on the property during the short sale process, thus kicking out the short sale buyer.
Make sure the Realtor is a CDPE, Certified Property Distressed Expert, or has experience in dealing with short sales and foreclosures, and that the person or company handling the short sale process for the seller has proven experience.