Is It Easy To Buy A Foreclosure?

By
Real Estate Agent with STL Buy & Sell Real Estate Services 2006005375

The simple answer to that is, "NO!" Foreclosures are mean, angry, volatile, unrelenting creatures that make no sense what so ever! But once you get past all of that, there is a diamond in the rough just waiting for you to polish it!

Buying a foreclosure is not easy for the simple fact that no mater whether you are dealing with a government owned property or a bank owned property, there are tons of hoops to jump through (very little regulation or accountability for their actions, time lines that they almost never meet, unworldly expectations of you, etc.) Here is a basic rundown of buying a foreclosure from start to finish:

  • Make an offer on the foreclosure (6 page contract)
  • Wait 7 to 10 days for a response
  • Find out there are multiple offers so there are new forms to fill out
  • Make "Highest and Best" offer on property
  • Wait another 5 to 7 days for a response
  • If my offer is accepted, now I have a 9 to 15 pages "Contract Addendum" to initial and sign which supersedes my original contract and states that if closing is delayed due to my fault (inspections, surveys, lender, etc.), the seller will charge me a $100 per diem. That Gets EXPENSIVE!
  • Have inspections done and find out there is or is not a serious issue with the property. (You only have 10 calendar days to have any and all inspections done.)
  • Waiting to get signed contract back from seller so I know we have an actual contract.
  • Title work is usually ordered through the seller's choice of title company. This usually saves the buyer money.
  • Hope there are no encumbrances or judgements against the property.
  • Wait for lender to give final "Loan Commitment" stating that they will lend on the property.
  • Still waiting for signed contract from seller.
  • Find out from Lender how much I am going to need to bring to closing in the form of a Cashier's Check.
  • Show up for closing with check in had and excitement over my new investment and potential rainfall! Finally get a copy of signed contract from seller.

That is a basic rundown of what happens during the contract period but also imagine yourself doing all of this while riding a massive roller-coaster. Dealing with HUD can be even more agonizing because they tend not to know what is going on. Example: I have an accepted contract on a HUD property. Two weeks into the contract, I get an email stating that my contract has been voided and the bidding process will be reopened tomorrow morning. Why? What happened? What did I do? It is not due to any fault of my own. The asset manager and the area contact have not been in communication so the asset manager does not know that I have sent my earnest money to their title company nor does he know that I have submitted my pre-approval letter. He does not bother to follow-up with the area contact and elects to reopen the bidding. I lose the deal!

Now, that example is an extreme one but it has happened. You just need to make sure that you and your agent are aware of all time lines and keep in constant contact with the asset manager or the district contact. Know your rights and responsibilities as well as make sure you have an agent representing you that is very knowledgeable of the whole process.

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Rainer
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Thomas Hernandez

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