Real Estate Blog - Slap me silly, or "What part of AS-IS for a short sale, foreclosure, REO don't you understand?

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Slap me silly, or "What part of AS-IS for a short sale, foreclosure, REO don't you understand?

Slap me silly, or "What part of AS-IS for a short sale, foreclosure, REO don't you understand?

Contract 101...or 102, or 100 I don't know what to do???

What contract do you use when you are dealing with a short sale, a foreclosure or and REO (bank owned property)?

What addendums do you need?

Do you know?

Here's my training:

1. If you have an offer on a short sale, a foreclosure, or a bank owned property...you need to use an ASIS contract...really is anyone going to make any improvements?

2. How old is the home you are buying? Do you need a lead based paint disclosure?

3. Is there a condo/home owners association? You need that addendum.

4. If it was built after 2003...should you use the Chinese drywall addendum?

5. How is the customer paying? Cash, mortgage, assumable? VA/FHA, if it's VA/FHA you need that one too.

6. Is there mold? If you don't know, you need that addendum as well...

7. Is there a buyer services guarantee? If so...more paperwork.

8. Is their an energy efficiency rating? Better check.

9. Do you have a pre-approval letter? If not, did you explain that important part of the process to your customer (yes, it's a customer unless you have a fiduciary relationship).

10. Did you provide the closing cost's to your customer? UM...yes, they need that as well.

Oh and don't forget to supply the effective date and a copy of the MLS sheet...to your broker.

OH yes my customers, we do have lot's to consider and to make sure we cover for you as a REALTOR(r), we are worth our weight in gold! We have your back! We love what we do!

AM I RIGHT? YOU TELL ME!!!

http://www.KarenMonsour.com, 954-464-4194 cell

Posted by Karen Monsour,REALTOR® Broward,Palm Beach,Miami/Dade! 954-464-4194 anytime! on 05/26/2009 03:50 AM

Comments (51)

Real Estate Offer's in South East Florida in the ActiveRain Channel

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51 Comments on Slap me silly, or "What part of AS-IS for a short sale, foreclosure, REO don't you understand?

MAY

Even the original purchase agreement suggest an "AS-IS" approach, but it never really is.

A buyer can still ask for credit, no matter what. Doesn't mean that they will get it.

But they can certainly ask for something from a bank-owned or short sale that was non-discoverable when they made the offer.

Karen, are you tired of getting incomplete contracts? Or just frustrated with the buyers?

Hint. Hint. ALL resale properties sold "as is".

It's the difference between buying a pair of shoes at Nordstroms and buying a pair at the Good Will.

The difference between bank owned sales and home owner sales is that the "property condition" paragraphs/addenda are strcken.

As all things in real estate, from our experience, even bank addenda are negotiable, but not much.

Great post Karen.

Well, "As-Is" isn't always cut and dry!

I have had two different bank owned/short sale experiences - one included an addendum that though it stated it was an "As-Is" sale, and included a "mold possibility addendum", it did also include one that allowed for termite inspection and repair to a specified amount; but the bank required that their contractor was the one to do the repairs.

With the second one, the agent told me it was an "As-Is" and of course the seller/bank would not make any termite repairs as no money was being made!

I believe that the agent was doing her best to get the deal done without further expense, but it does keep one on their toes with all the possibilities!

And FSBO's don't think we are "worth our weight in gold"!? The general public has no clue what knowledge a realtor must have or continue to acquire in order to provide the best service possible!

You are so right that some agents have a hard time remembering to include all of the addenda that goes with the various "types" of listings these days. Even harder is remembering that when you have a "regular" sale that you get to use home inspection addendums and get responses from the listing agent!

In Wisconsin we don't have an "as is" contract...what I think every state has (unfortunately) are realtors who don't want to admit they don't know...Know what you don't know and then make it your business to find out......

Some of the lenders will consider repair requests relating to REO properties. However, many REO listing agents want to avoid repairs because they do not want to advance the cost and then face a slow and difficult reimbursement for the funds. Asset managers are taking advantage of the listing agents by forcing them to front the funds for repairs, utilities and HOA dues.

Follow me on Twitter: http://twitter.com/roykelley

One must become expert at real estate contracts and bank contracts. In Phoenix, the bank bank over rides the realtor contract. Great post-No slaps yet

You must have gotten a buyer contract for an AS-IS property where the buyer agent is asking for all kinds of extras in money and possible repairs.

Bettina

I also broker in FL. That Chinese drywall, I was not aware of it until recently. The epitome of caveat emptor.

For the most part. a standard purchase contract is typically used in our area, as a way of initiating the transaction as the banks will only be sending out their own addendums, but they usually parallel the initial paperwork. Buyers should understand that the homes are being sold 'as is, but there are always circumstances that could require a bank to bend somewhat. I had a foreclosure with a private well that had sat idle for some time. Typically his will cause bacteria to infect the well, which is treated by shocking the well with chlorine. When the final water analysis was completed, the well was found to be potable, however, it also had radon gas present. The original owners never knew, but the bank now had to install the filters for the buyers or else put it back into the market and the listing agent would now have to disclose the problem, and they wanted nothing to do with that.

Realtors better get this information down...it seems these days we can't shake a stick without hitting a foreclosure or short sale.

I would add that when you post on the listing in bold letters, no FHA or VA, that is what it means. I get those where they say, but will the seller consider FHA or VA. Ah well....

The California Association of Realtors actually provides a list of disclosures required for Short Sales and another for REO's so that we don't miss any.

York County Pennsylvania here!

Great post Karen!!!!!

Educate Educate Educate! Buyers really don't understand unless we educate them!

Karen, in CA, our standard contract includes an AS-IS clause and all homes are sold as-is. Which is fine, as long as (1) the seller discloses all material facts that they are aware of (2) the buyer has access to a complete home inspection showing the condition of the house. The problem is that most sellers (especially short sale and REO) do not want to pay for home inspections, so the buyer does not have access to a comprehensive report that shows the true condition of the building. AFTER an offer is made, and the BUYER has to pay for their own home inspection, then problems are discovered, THEN everyone has to go back to the negotiating table to re-calculate the price & terms.

That's why I always recommend a pre-listing inspection, which YES the seller pays for.

The majority of short sales I've completed always require buyer and seller to sign an "as-is" addendum.

I can throw another addendum on the pile...I broker in Texas and we have a warning about Oak Wilt, a tree disease that has wiped out tons of Oaks. It is sad but yet another thing we have to warn about...so call your tree doctor and make sure all is well! :o)

Hi Karen, you make a great point that you better know the rules of the game before you play it!!!

In PA we don't half a lot of the stuff you are suggesting, but there is plenty of paperwork nontheless. York and Adams counties have streamlined a lot of the paperwork.

I've never even heard of the chinese drywall addendum. That's interesting.

I agree that the contracts are there in black and white, but I think it's funny when someone (anyone but me of course) wants to read through something and the others involved get frustrated.

I was at a closing and my client wanted to read over the terms of their loan - the closer got wide-eyed and started sweating. "I have another closing in a few minutes!" she said. The buyer was a fast reader and cleared up his questions in about 5 minutes, but I have never forgotten that and don't recommend that company.

Good post.......there is so much 'new' stuff to handle these days. Your brokers are a good source to know hat is needed and required. I've got a list of stuff agents neeed to present...up front. Buyers needs to know that an reo or bank owned transaciton isn't as smooth as most normal sales. And we try to actually almost scare the upfront.....and alert them to some of the common things to expect with this type of sale. Intersting times, et!

Oh yeah, I too, love the buyer (which I represent) uses the as is contract and then after the inspection want so to ask for repairs. At this point I must apply my poker face and calm neutral voice.

I hope they dont come up with a chinese drywall addendum for us.

I usually include everything and the banks addendums supercede most of them anyway.

Chinese drywall addendum...? That's funny

Ralph,

Those are some good points. We have two different contracts here. On is for homes who are not short sales, foreclosure, or REO's where the seller is still in good standing, however, has decided to sell their home, ASIS. In that case we use a regular FAR10 with an ASIS addendum.

On the other hand, all short sales, foreclosures, and REO's are an ASIS contract specific to these situations.

Maria,

The buyer's are great. It just amazed me how many agents don't include all the appropriate addendums when presenting an offer...and how many do not read the MLS sheet and send all the documents. Or who don't know the difference...

Lenn,

Absolutely, thank you...

Ha...I love Gary's comment today. So true.

Patricia Aulson/Portsmouth NH Real Estate

Eilean,

Nothing in a real estate offer is cut and dry. However, our ASIS contracts have a place where the customer has the right to inspect (if you check off the appropriate box) and if the damage is over a specified amount of money, they can cancel the offer.

We are our weight in gold..,.

Cindy,

Glad to hear someone else understands what I am saying here. We have a check off sheet and everything our office manager wants...better be there or she will let you know about it...in a nice way of course.

Sally and David,

That is why it is so important to be with a broker who expects the best out of their agents. They are always there for us and always willing to step in and help when you need it.

Roy,

Interesting point you bring up here. There are agents that are paying up front fee's to fix things so that the deal will go through. Most of those agents work as listing agents for the banks...

Anyone else have an opinion on what Roy posted?

Harry,

Are you saying the bank has a different contract than the one that you present? How does that work?

Bettina,

Not really, this blog was precipitated by something else.

Frank and Jodi,

We now have an addendum that we have to use. The Chinese dry wall end's up damaging electrical items in the homes..like computers, TV's, radio's... It is found in many of the Lennar homes built after 2003, after Wilma when drywall was in great demand. Lennar ordered the dry wall, built condo's and homes which now must be gutted...I know a lot of unhappy people who bought and now have to have the entire inside of their home/condo redone. It's a serious situation here in the So. Florida area. You just have to make sure you know who built the home. It's like the lead-based paint disclosure.

Ed,

I'm sure the you are right about that situation. As I said, there are so many unique situations that occur when writing and offer and trying to execute a deal. Without a professional REALTOR(r), how would potential buyers stay out of sad situations?

Linda,

How right you are!

Joe,

We have been able to get some FHA loans here in Florida for short sales, etc.

Vickie,

Our state doesn't provide us with a "list" so to speak, however my brokerage does.

Dawn,

Hello there PA! That is where I am from originally. My son (who has posted along here somewhere) sell's in Gettysburg, PA!

Education is the key to success, you are so spot on with that comment! Thanks.

Regina,

Thank you so much for that advice. What a great idea. It certainly would seem to save a lot of head aches in the long term.

Our standard contract and the addendums that you can use with it also has an ASIS portion. This is used with an offer which is not a short sale, foreclosure, or REO...for instance, some MLS sheets state in the broker's remarks that the home is being sold ASIS at the request of the owner.

The contract that we use for short sales, foreclosures and REO's have removed - the "Maximum Repair costs" - as there are not going to be repairs...

Thanks for the information.

Brian,

Thanks for your comments.

Rob,

Always read through everything. The other agent that didn't have time,..well, I allow three hours for a closing. I had one one night that started at 6 pm and ended at 10 pm on a Friday night. The buyer read every single line...

EXIT hill,

Oak wilt? well I'd rather have to worry about oak wilt than Chinese dry wall...they have to tear all that dry wall out and start over,.

You are talking about outdoor tree's right?

Gary,

Thanks!

David, my son...

I think that the Chinese dry wall is an issue more here in the south than in the north. It is more than likely that it has been used in area of floods, hurricanes, and locations where lots of supplies were needed in a hurry. In 2005 when the building boom was going on down here, they were running short of dry wall. That's when they ordered the Chinese dry wall. It damages electronics, and makes people sick. Lennar homes/condos have a huge issue with this, so much so that the owner has "rumor has it" moved to Georgia.

Anna,

My brokerage does this as well and it really and truely helps us to be better at representing our customers (we are transaction brokers).

An,

LOL...

Chuck,

Chinese dry wall was used after some of the most horrific hurricanes here in the south...and also during the building boom of 2005.

Aaron,

That is good policy!

No-name (want to log in?),

Chinese dry wall is really not funny. It has become a very serious issue with some of the owners here in south Florida who have had to have the homes/condos built mainly by Lennar homes to gut their residences and to start over.

Patricia,

The rules of the game, the knowledge of the agent. The reason the customers need a professional in these times to represent them.

Karen...remember that if you have a third party negotiating the Short Sale, THEY also have a few addendums that need to be signed!!!

Sergio,

Yes, you are so right about that. It would be nice if they were attached to the listing.....wouldn't it?

MAY

In New Jersey, "as-is" is included in the standard statewide approved contract language. However, any decent lawyer in NJ will tell you that it means much of nothing. However, in the case of a short sale, explicitly written addendums spelling out any "as-is" limitations are typically created to accompany the contract. This way no one gets amnesia after the home inspection! :)

Amber,

Thanks for your post. I love this statement: "This way no one gets amnesia after the home inspection! :)" So true!

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