What's the best way of buying a foreclosure?

No. If this is a requirement of your buyer's lender then you should expect to order and pay for that inspection. The same for any other lender required inspections.

What if there is evidence of infestation on the Pest report?

Your buyer's lender may have a stipulation that these items must be corrected prior to close of escrow. Please be aware that your buyer will, more than likely, be responsible for correcting those, not the bank. We suggest you get your termite inspection done well within your contingency period to determine your obligations.

Does the Seller offer Financing?

Not usually. If they do, it will be noted in the MLS. Most Sellers require that your buyer have a pre-approval letter from one of their loan officers, though there is no obligation to use that lender.

Contingency Period?

Your buyer must adhere strictly to the contingency periods or they risk having their contract canceled and losing their deposit. This is a business transaction and banks don't like excuses or delays. Most banks institute a "per diem" charge for delayed closings.

Please pay attention to these time frames and provide contingency removals to listing agent in a timely fashion.

Will the Seller accept Contingent Sales?

It is highly unlikely that any bank would accept an offer contingent upon the sale of another home. If the bank accepts your offer then finds out that the buyer really does need to sell a home in order to purchase (and you haven't disclosed that) the sale will be immediately cancelled and the buyer will lose their earnest money deposit.

Disclosures?

Bank owned properties are exempt from disclosure in all jurisdictions where we work. Therefore you will not be provided with a disclosure, or disclaimer. You may fill out and have your buyer sign a lead based paint addendum, but the Seller has no knowledge about this to sign a disclosure/disclaimer.

Can I add or delete Buyers once in Contract?

All changes must be made in writing and ASAP.

There are many levels and channels to go through to an REO sale. Everything takes time. This still does not guarantee that the seller will agree to any changes, and they never allow assignment. If your buyer is married and plans to buy as married be sure to write contract with both husband and wife prior to submission. If you are working with an investor that is planning on taking title in the name of an LLC, or corporation they will either have to form the entity prior to writing (to provide documentation to the bank the entity exists, as the banks are required to verify this under federal law) or they will have to transfer the property after settlement.

Everything you need to know is answered here.   If by chance you have additional questions or concerns, please start with me at 240-388-8789 or email her at din.khaled@ziprealty.com.

Part III.

Are these verbal agreements?

Once you are informed that your offer is accepted, it is. REO departments and Asset managers give the "ok" and then go to their managers for signatures. (It is highly unlikely to have an Asset Manager "un-accept" an accepted offer. Yes, you could be the first, but it is highly unlikely.) We realize it is an unusual business practice to agree to offers orally, but the banks have their own way of doing business and we appreciate your understanding.

IF YOU ARE NOTIFIED THAT YOU HAVE AN ACCEPTED OFFER, PLEASE FORWARD THE OFFER TO YOUR LENDER SO THEY MAY BEGIN THE LOAN PROCESS. AT THIS POINT THE CONTRACT MAY NOT BE SIGNED BY SELLER, AND IT MY BE A FEW DAYS OR LONGER BEFORE RECEIPT OF A FULLY RATIFIED CONTRACT. IF YOUR LENDER HAS A PROBLEM WITH THAT, INFORM THEM THAT THIS IS AN REO SALE. THAT SHOULD SATISFY THEM IF THEY ARE FAMILIAR WITH THE PROCESS.

Despite any delays in returning the contract the bank does expect you to make the contracted close date. Any delays may cause the buyer to pay a penalty.

Who chooses the Escrow and Title Company?

The reality is, when buying a bank owned home there are "gives and takes". One of the items that your buyer will need to be flexible about is that the bank will, more than likely, choose the title company. (The Listing Agent has no say in the matter either - I have my favorite companies too, so we are all in the same boat.) This is due to the fact that they have significant amounts of title work done during the Foreclosure process.

TITLE COMPANY CONTACT INFORMATION COMES WITH THE SIGNED DOCUMENTS FROM THE SELLER. You will be notified when we are informed of which title company will be doing the settlement.

Continued multiple and/or daily queries slow down the process for everyone involved. Please be considerate, we are all working towards the common goal of closing on the subject property and I have no control over the bank's response time.

Time frames?

Generally you will have 30 to 45 days from mutual acceptance (even if verbal) to close the transaction. Often the proposed closing date on the original offer is unrealistic due to the elongated negotiation and acceptance process with the REO departments. The Asset Manager knows that you can't close in a week and a half. They are not here to work against you. Asset managers know that appraisals, inspections and the loan process take time. They will assume that you have taken the time prior to making an offer to become preapproved for the loan and that there will be no trivial delays beyond the 30 to 45 day closing period. Read the Bank Addendum carefully – there is often a per diem late fee assessed for tardy closings. The bank will not suffer delays due to the Purchaser's Lender not performing in a timely manner. Begin your inspections upon being alerted that your offer is accepted. Do not write an offer with a settlement date later then the 26th of the month. This allows the bank time to close out the property before the first of another month, making your offer more favorable. Middle of the month settlement dates are best, and you will find even on your retail transactions they result in less delays.

Can the Buyer do Inspections?

Just like any other sale, your buyer has the right to fully inspect the property within the frame of the purchase agreement. Seller will not order or pay for any inspections. All sellers require the buyer to de-winterize the home for inspection. It is also the buyer's responsibility to re-winterize the property.   ($150.00 for each plumber visit by certified plumber ONLY)

How do we set up inspections?

It is Highly Recommended that you give 5 BUSINESS DAYS NOTICE PRIOR to scheduling your inspection. Some utilities (such as electricity) will likely be on prior to your making an offer; others will not (such as gas or propane). The Listing Agent will not be responsible for re-inspections and/or associated fees. It is not a bad idea to visit the property a day PRIOR to the inspection to check if systems are on and working.

Can the Buyer cancel if they find something wrong?

The buyer has the right to cancel the contract and receive their deposit back if they do so within their contractual time and condition.

Part II -

Submitting an offer.

The bank will requires that we submit all offers to them on a summary form, which is called the "Offer Worksheet." This is aimed at simplifying the process for the Asset Manager, who will more often than not, have a large number of properties under management  and often in multiple states with vastly different real estate contracts. This worksheet will have the "basics" only (Price, Terms, Concessions, Closing dates, etc.).

·       ALL offers must be submitted with copy of deposit check and loan APPROVAL letter. (a printed commitment from automated underwriter is preferred)

·       ALL offers must be submitted on state contracts, the lenders are not interested in having us present them offers sent as letters of intent.

Deposit checks should be made payable to the listing broker, it is very rare that the seller's contracts, and counter offer addenda will not stipulate the deposit being held by seller agent or seller title company.

More often than not the seller requires the deposit in certified funds.   You will learn the name of the title company when the contract is accepted. Please be sure that buyer has deposit funds available NOW. If offer is accepted, the seller and real estate law; require the deposit money to be deposited within 48 hours of contract acceptance.

PLEASE DO NOT ENTER ANY NAME(S) FOR SELLERS ON ANY DOCUMENTS.   TAX RECORDS DO NOT ALWAYS REFLECT THE CURRENT SELLER OF RECORD

What form should I use?

You should submit your offer on a standard MAR forms.

Where can I get a property disclosure form? There are no disclosures. Bank owned properties are exempt from Disclosure/Disclaimer laws, so there are is no disclosure, or disclaimer needed with the offer. There is no previous owner to tell us how old the roof is, or if everything is working as a result we have NO information specific to the property your client is interested in, nor does our client.

How soon will the Seller respond?

We have no control over the bank's decision-making process. On rare occasions they will respond in the first 48 hours. However, more than likely they will respond in 3 to 5 days. Please be patient and do not call the listing agent to check on progress. The listing agent will notify you immediately when they get a response. Some banks do not look at offers until the property has been on the market for 5 to 10 days. Please be considerate, we are all working towards the common goal of closing on the subject property.

There have been occasions when a counter has taken well over 3 weeks. The Asset Manager is dealing with 100's of properties, and they receive 10, 20 or more offers in a day it takes some time to go through them. But I promise to notify you as soon as we are notified!

DO NOT ATTEMPT TO CONTACT SELLER or ASSET MANAGER. THIS WILL JEOPARDIZE YOUR TRANSACTION. ALL CONTACT MUST BE MADE THROUGH LISTING AGENT.

Will I get a response over the weekend?

No, any offer submitted over the weekend will be presented the following business day. Do not expect the Banks or seller agents to be available on weekends.

How does the Bank counter?

Since all offers are submitted to the seller on the worksheet through an online program, your counter offer may come back in the "worksheet" format, but more often or not will be delivered to you through an email from me, by giving you simple details of what the bank is willing to accept. If there are multiple offers, the bank will typically verbally counter all with "highest and best" and we will notify you of this by email. This means come back with all you got and the bank will choose at that point. They will likely not counter after that.

PLEASE read the counter offer completely and be sure your buyer understands ALL terms. Please provide an email that you check regularly so that we may reach you ads we will not generally communicate by phone.

This is what I give to my clients -  Part I

The foreclosure process is much different than a typical retail sale. In and REO,the seller calls all of the shots. Some terms will be deleted from the usual contract,some terms may be added that are not familiar. Please understand this and that it is not negotiable.

The Listing Agent (REO Broker) is simply a conduit between the Buyer's Agent and the Seller. The Listing Agent does not have any power or say as to what the  terms are and has little or no negotiating power or influence.  Do not cause this sale to be extended. Settlement date is extremely important to banks. Typically a financial penalty is imposed upon buyer and buyer's agent if settlement does not close on time. It is imperative that you stay on top of all inspections, appraisals and the lender to get duties performed in a timely manner as no extensions will be granted.

The Seller will not normally negotiate after they accept your offer. Negotiate all terms prior to acceptance to minimize problems during the contract to settlement process. This includes repairs. Please do not think that you can get under contract and then request repairs, the bank will say No and this is waste of everyone's time.

What to offer.

Sellers appreciate serious Buyers. Please be absolutely sure the Buyer is ready and willing to go through with the purchase.  Avoid writing significantly lower questionable offers.  We understand every buyer's desire to get a"Super Deal". Unless you can document why the Seller should take significantly less than the asking price, please don't write the offer. Please advise your Buyer that the Seller has already had at least two different Broker Price Opinions (BPOs) and probably several appraisals prior to listing this home and they are expecting an offer in fair market value range.

THEY'RE NOT INTERESTED IN LOOKING AT SERIOUSLY LOW BALL OFFERS OR BUYERS ATTEMPTING UNLAWFUL OR "SHADY" DEALS.

Pre-Approval.

This is what I give to my clients -  Part I

The foreclosure process is much different than a typical retail sale. In and REO, the seller calls all of the shots. Some terms will be deleted from the usual contract, some terms may be added that are not familiar. Please understand this and that it is not negotiable.

The Listing Agent (REO Broker) is simply a conduit between the Buyer's Agent and the Seller. The Listing Agent does not have any power or say as to what the terms are and has little or no negotiating power or influence.  Do not cause this sale to be extended. Settlement date is extremely important to banks. Typically a financial penalty is imposed upon buyer and buyer's agent if settlement does not close on time. It is imperative that you stay on top of all inspections, appraisals and the lender to get duties performed in a timely manner as no extensions will be granted.

The Seller will not normally negotiate after they accept your offer. Negotiate all terms prior to acceptance to minimize problems during the contract to settlement process. This includes repairs. Please do not think that you can get under contract and then request repairs, the bank will say No and this is waste of everyone's time.

What to offer.

Sellers appreciate serious Buyers. Please be absolutely sure the Buyer is ready and willing to go through with the purchase.  Avoid writing significantly low or questionable offers.  We understand every buyer's desire to get a "Super Deal". Unless you can document why the Seller should take significantly less than the asking price, please don't write the offer. Please advise your Buyer that the Seller has already had at least two different Broker Price Opinions (BPOs) and probably several appraisals prior to listing this home and they are expecting an offer in fair market value range.

THEY ARE NOT INTERESTED IN LOOKING AT SERIOUSLY LOW BALL OFFERS OR BUYERS ATTEMPTING UNLAWFUL OR "SHADY" DEALS.

Pre-Approval.

Start the loan process prior to making an offer. This avoids surprises and will save the Buyer from paying the per diem penalty or even losing the Earnest Money Deposit (EMD).

Bank REQUIRES the Buyer to obtain a loan pre-approval from them before submitting an offer. This is non-negotiable and we cannot send your offer to the bank without it.

Cash Offers require Proof of Funds. Don't wait for the Seller to require it. Send Proof of Funds with your offer.

Don't look at "in-foreclosure" properties. If you want to purchase a distressed property stick with REO properties. Easier and way better on the nerves! .... Happy funding, Rudi