Many people have heard that there are some great real estate deals out there for buyers interested in short sales and foreclosures. In a lot of cases, that's true. However, these distressed properties come with their own sets of issues.
The major challenge with short sales is the time involved from start to finish, and whether or not the transaction will actually be completed. This will be the subject of a future blog entry. Today I would like to focus on foreclosed properties, or "REO's" (Real Estate Owned [by banks]).
In a sale between private owners the buyer writes a contract, they may negotiate with the seller on price and terms, and eventually come to an agreement. Then the terms and conditions of the contract are met, and the sale proceeds until the transaction eventually closes.
When a buyer wants to purchase a bank-owned property (foreclosure) the buyer's agent will write a purchase offer and present it to the bank's agent. In my past REO experiences, the bank generally comes back with a verbal counter offer, and if the buyer accepts the verbal offer, then comes back in writing with their own amendment or counter offer, which supersedes the original state approved purchase contract. These bank amendments are usually substantially more lengthy (I've seen them be over 20 pages), full of legalese, and are always in the bank's favor. Certain buyer's rights and warranties that are provided in the state approved contract are wiped away by the bank's amendments. Buyers are advised to have an attorney look over the amendments and fully understand them before signing and agreeing to them.
Some of the terms and conditions that are common for the banks to include in their amendments:
* Increased purchase price
* Close of escrow within 30 days of the signed amendment
* A per diem penalty if unable to meet the close of escrow date
* Requirement to use seller's choice of title and escrow company
* Requirement that the sale is made "as-is" with no repairs
* Refusal by bank to provide HOA information, or for them to pay any HOA transfer
fees or other outstanding HOA assessments
* Until the buyer signs the bank's amendment, they can still accept a higher offer if they
so choose
In spite of this, if the buyer understands and accepts these conditions and proceeds with eyes wide open, they may still be able to get a great deal.
Patricia Paul, GRI **
www.PatriciaPaulProperties.com ** (520) 548-2078
4 Bedroom in Rancho Sahuarita $1,250.00
3 Bedroom near Kolb/Escalante $1,100.00
3 Bedroom near Pantano/Golf Links $1,025.00
3 Bedroom near Midvale Park $900.00
