Here's the last part of the Foreclosure FAQ series.

I am an investor purchaser, why am I being told my deposit is non-refundable?

In 2004, several of our corporate clients adopted a policy towards investor purchasers, in essence removing financing and inspection contingencies. This in essence makes the investor purchaser's deposit non-refundable. This is due to several reasons: 1. The market is so strong there are generally multiple offers. In accepting the best offer, they will be loosing several other buyers if the first buyer fails to close. 2. It is a case of one or two bad apples ruining it for every one. Specifically, some investors do not take the time to see the property until their offer has been accepted. Then they want to use the inspection clause to cancel the contract. This is to eliminate offers in which the buyer has not seen the property prior to offer.

Finally, the Seller presumes that as a Real Estate investor you are more knowledgeable than say a person purchasing their first home they plan to use as their residence. As an investor, you have your financing in place, you are able to determine cost or repairs and based upon your visual inspection and can anticipate what repairs are not readily observable and plan accordingly.

When Do I finalize my loan application and begin my inspections?

Once all terms are verbally accepted by you and the Seller you must finalize your loan application and begin your inspections. Do not wait until the signed contract is returned from the Bank Seller. Also, if you are obtaining financing your mortgage company's appraisal must be completed during the inspection period defined in the contract.

Why is there a charge for a Late Closing?

In nearly every instance the corporate Seller will have a clause in their addendum that states if the sale does not close upon the agreed upon close date, buyer agrees to pay a per diem of $100 to $200 per day for each day the contract is extended. For example, if the contract close date is January 3, 2007, and you need until January 8 to close you will be charged $500 to $1000 in addition to the contract purchase price. The per diem charge generally includes weekends and Holiday's.

The reason for the late charge is that when the bank accepts your offer price it is based upon a specific close date. If you fail to meet the close date, it costs the corporate seller to hold the house. They are passing that cost to you.

Do Cash Buyers Obtain Better Deals?

Yes and No. The close date is more important than the means the buyer is paying for the home. For example, a cash buyer that needs thirty days from contract to closing is not as desirable as a financing buyer that can close within 14 days. Furthermore, many cash buyers are really obtaining financing. They are just making an offer without a financing contingency. Remember, we are required by the corporate seller to verify the means and the buyer's ability to pay for the home. Financing buyer's should instruct their mortgage broker to provide the strongest letter of pre-approval.

There you go.  I hope this will help you and your buyers!