The past year and a half ushered in an unprecedented number of bank-owned property sales in San Francisco. But actually purchasing one can be a challenge.

For one thing, there’s a fair amount of all-cash buyers in the city, and when they decide to make offers on bank-owned (or any) properties, they are formidable competition. But San Francisco prices are high, and the majority of buyers for city properties don’t have more than half a million in cash laying around. So financing is typically involved in bank-owned purchases.

Competition among buyers in general for bank-owned homes is strong, because the perception exists that such properties are “deals.” In some cases, they are. But disclosures are minimal, and even with property inspections involved, there will always be information lacking (and appliances missing). And the reality is that many homes in this category end up selling at or around market value—especially those located in central, walkable locations. Paying market value for properties that offer little in the way of history or known issues doesn’t usually resonate well with buyers.

Even so, the bar is rather high in San Francisco when you’re competing for bank-owned properties, especially when they’re listed below market value. So when that bank-owned, $600,000 house comes on the market in the neighborhood where such homes typically sell for $650,000 and above, you can bet you won’t be the only buyer making a bid. The list-it-low strategy still works like a charm.

Here’s what you can expect if you decide to write an offer:
Preapproval with the bank that owns the property. You may have spent hours submitting documentation to your mortgage broker or lender to get to this point, but if the listing office is recommending preapproval with a particular lender, the bank probably won’t consider your offer if you haven’t been preapproved with that institution. Allow time for completing the preapproval.

Short inspection periods. Expect to compete with buyers who are limiting themselves to seven-day or less inspection periods, and keep in mind that the bank won’t be making repairs or offering credits. What you see is what you get.

45-day close of escrow. All-cash buyers will probably be able to close in 15 days, but 45 is the norm for bank-owned sales. Expect some rough going when it comes to the appraisals, because appraisers like to see appliances and working systems.

14-day loan/appraisal condition removals. If you’re working with the lender who’s also selling the property, this is doable. But make sure your agent is on top of things and checks in with the lender. I’ve seen situations lately wherein lenders let a file sit for a week before anything got done.

No appraisal condition for over-asking prices. If you write an offer for substantially over the list price, it’s likely you’ll be expected to waive an appraisal contingency. If the appraisal does come in at less than your offered price, you’ll have to come up with the outstanding amount.

Keep in mind that none of the aforementioned are mandatory. You can write an offer with whatever terms you’d like. But do know that your competition will be working on this level. So if you really want the property, this is probably what you’ll need to include in your offer to “win.”