Jul. 28, 2008
Many buyers find themselves in the situation of looking at distress properties – short sales, foreclosures, and bank-owned properties. It may be because you specifically want to purchase this type of property, or that may be all that is available in your price range.
Some things you need to know as a prospective buyer if you get through the offer process and the short sale, foreclosure or REO is approved by the bank:
BUYING THE HOME AS IS:
Generally these are homes you must purchase “as is.” Be aware that you will be the one taking the responsibility for making repairs, not the lender. So find out what defects there are upfront by having a thorough inspection. In some case some repairs may be negotiated but don’t expect it. If the costs are high for these, factor this into your thinking about whether this is the right property for you or not.
Depending on the issues, you may want to have one or more tradespeople in to evaluate the defects (say plumbing and electrical) so you have an idea of how much the repairs might be. This additional information MAY be helpful if you are attempting to negotiate repairs (a good idea even in the case of a typical sale where you are dealing directly with the homeowner).
TERMITE ISSUES:
Here in California it is common for properties to have termite issues (this may not apply to those of you in other parts of the country).
In the typical sale the seller will complete a termite inspection and take care of infestation and termite damage as part of the negotiations (There are exceptions). A termite clearance MUST be provided before your lender will allow closing to occur. In the case of these distress sales you will often find that the seller, because of financial hardship, will not be responsible for termite repairs, but may pay to have the inspection done (they are pretty inexpensive). In the case of REOs, however, banks often will not do the inspection either. The Catch 22 is that your lender might require a termite inspection as well as a termite clearance.
If the bank is not willing to pay for this then you will need to do so. It is a good idea to have your own termite inspection if the seller will not so you are aware of any issues and can take care of them accordingly.
Be aware that with short sales and REOs, you may have to take care of the termite problems yourself in order to obtain the clearance and meet your lender’s requirements.
It is smart to work with an agent who has some experience with short sales and similar transactions so you get the guidance you need to make the right decisions.
Blogs Homepage
Featured Entries
Recent Entries
Recent Comments
Vendor Blogs
Tags
My Starred Entries
Create A Blog
RSS Feed