Liquidated Damages, AS -IS, WHERE-IS and WITH ALL FAULTS...Certificate of Occupancy, Correcting Defects...These lines come directly from a present contract my buyer has right now.

Hello friends and welcome to the extremely profitable, make you rich, retire young world of foreclosures...         E n o u g h with this nonsense. ....There was a time when the savvy investor could get rich from foreclosures...in my opinion those days are long gone.

When I blog I do so with issues I feel can help a buyer or seller...here goes...

I have been working with this one buyer for 13 months now...(yes 13 months). He is a first time buyer and wants to find the right house. We have seen approximately 50 -60 homes in this past year. It has been trying but my job is to help both buyers and sellers. I never would push anyone to make a hasty decision, the client's needs are the most important, not mine.

We finally found a home, it was a foreclosure...Now, I have done short sales, foreclosures and some very tough regular sales, but this one takes the cake.

When I found the property on the MLS I knew we had to see it immediately, not because it was a foreclosure, but because it comped out $25,000 under present market.

I sent my buyer an email and called him immediately to tell him we need to act now and see if it is something he wants. When we arrived at the property, all utilities were off, water in the basement and the smell of dogs was sickening.  

1^st lesson- to first time buyers-Foreclosures are generally in fair to horrible shape.  

With the issues we could see (and smell) it still seemed like a good deal, cosmetic issuses at this point. We continued to look around the house. As an investor myself, I noticed some issues, windows were old and needed to be replaced, electric was old and possible upgrade needed, the pitch of the pipes appeared wrong, there was an oil tank in the basement that needed to be removed (empty, previous owners converted to gas).

2^nd lesson- if it sounds too good to be true, it just may be that.

So now, I present my buyer with, "what do you think"? and he said, I like the area, the house is not as bad as some others we seen for more money..I agreed about that, but I then told him what I saw. I'm guessing the property has enough work to take him about 1 month to fix, it needs a new kitchen, new windows, the sidewalk has chips/cracks in it. These all add up.

3^rd lesson-check with the townships code when buying any property that states AS-IS, WHERE-IS. Townships generally will make you replace the sidewalks if they have some cracking and chipping and we all know this could cost thousands. They now also want (in some cases) hardwired smoke detectors, downspouts that properly drain and more, just to get the C.O.

My client likes the property and wants to bid, we agreed that the house needs about $15,000-$20000 worth of work. One piece of advice I tell all my clients to think about....if the house has problems you CAN'T fix or change and it will bother you, don't buy it. So far we see only cosmetic issues.

We place a bid and get into a multiple bid situation. Our second bid was best and final and we had won the bid. The other selling realtor has informed me the contracts will be ready on Friday, it is now Thursday afternoon. Friday comes and no contracts, I'm thinking someone else bid and their bid was higher. Ok, I call the realtor to find out what was going on and he informed me the contracts will be ready on Saturday and they were.

Saturday, i'm informed by the selling realtor (in these words) contracts are ready, make NO changes to them, and they must be back by Monday morning. My first comment was...how about my client gets them to his attorney on Monday and how about attorney review also??? The selling Realtor told me there is no attorney review, an attorney wrote the contracts...I replied, "we are getting an attorney review. I get the contracts home and on to our 4^th lesson.

4^th lesson, when buying a foreclosure ALWAYS get representation! Especially if you have not done this before.

This contract was SO one sided, even the attorney for my client has said he never seen anything so contradicting and against the buyer in his entire career. There was no ten day inspection, it was cut down to seven. There was a clause in the contract that stated if any liens are not found within twenty days of this contract date, the liens become the property of the BUYER. It goes on and on...

All in all, if my buyer does go through with this purchase, he will have a lot of work to do and spend some of his money for fix up. This "great" foreclosure after fix up will be valued at about what the market is presently for that area, maybe $5000 more. Here is the question, is this really worth it?

Some advice to people buying foreclosures...

•1.      DON'T BELIEVE THE HYPE, go see for yourself and make a responsible decision.

•2.      Know the comps In the area.

•3.      Get a Realtor (Buyers agent) to help you. DON'T JUST CALL THE SIGN! A Buyers agent will guide you in the right direction, negotiate for you and make all the unpleasant calls to the selling agent and bank for you.

•4.      WHEN YOU SIGN THE CONTRACT, immediately call the borough the house is in and find out what it needs to get a C.O. get them to come out. Do this within the 3 day attorney review. The little things just add up...

•5.      Hire a home inspector. A good one. Try to get him in there before attorney review is up.

•6.      Hire a Real Estate attorney.

•7.      In the Offer state "all utilities must be turned on for inspection"

I'd like to hear what everyone thinks...all opinions welcome. Please add to the advice also...

Dave Sulvetta Realtor-Associate

Century 21 Hearst Realty Inc.

http://www.davesulvetta.com/