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Beware of the Changes to the Contract by the REO Addendum!
There are now a lot of listings that are REO sales.   Those are Real Estate Owned by the prior lender, after that lender became the "successful" bidder at its foreclosure sale.  REO Sellers are not normal sellers.  If you are a selling agent negotiating a purchase of REO property, you should be prepared to inform the Purchaser about some differences.
The REO Seller usually provides an Addendum changing the usual terms of the Purchase and Sale Agreement [P&SA].  This post discusses three changes that are important to the Purchaser:  (1) the form of deed, (2) the form of title insurance and (3) the designated escrow agent.
Last month I met a real estate broker who told me about a recent purchase of an REO property for himself.  He got a great sale price.  However, the REO Seller provided a Quitclaim Deed with no promises about title, and the closing agent in Florida did not get a title insurance policy for the Purchaser.  I advised him to immediately order a title insurance policy (I do that a lot), and to hope the title company would be able to insure he was the owner of the house and it was free of prior ... more

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