Bank-owned homes not always best option

With heavily discounted prices, bank-owned homes often represent attractive options for buyers, but industry experts said the financially distressed properties often present difficulties, although the Home Seller Assist program will provide 100% funding for these REOs and will also do the same for short sales.

Jeremy Larkin, a St. George real estate agent for Keller Williams Realty, said bank-owned properties represent more than 50 percent of his total business, but navigating the foreclosure market is a difficult task in many cases.

Drawing upon his experience with foreclosures, Larkin said approximately 75 percent of the bank-owned homes are physically distressed.

"There are a lot of houses on the market, but a lot of them are garbage," he said.

Disgruntled former homeowners often vandalize the structures before they are forced to vacate, he said, leaving a giant mess behind.

"Whatever their plans were in life, they didn't work out," he said of the former owners. "You will see people take all of the appliances and fixtures."

Facing a pervasive housing crisis, Larkin said short sales have also grown in prevalence, as many seek to quickly unload their homes, selling for less than they owe.

The short sale process requires approval from the lender, often leading to frustration for the prospective buyer as they wait for a decision.

"Most buyers I talk to end up in frustration trying to pick up a short sale because of the long length of time it takes to get approval from the bank," he said. "The seller can't really make a move without the lender's approval."

Vardell Curtis, CEO of the Washington County Board of Realtors, said banks are sometimes slow to react, and some buyers are forced to wait as long as six months for approval.

"I've heard horror stories," he said of the short-sale market. "One of the greatest challenges in dealing with bank-owned properties is that the wheels don't move as quickly as the buyer would like."

Curtis said it is especially important to seek the assistance of a qualified Realtor when dealing in short sales, as they can sometimes expedite the lengthy process.

"Certain agents know how to make it happen in a much quicker timeline," he said.