Foreclosures are plentiful everywhere and our area in Northern Indiana is no exception. I love working with certain Realtors that handle a lot of foreclosures. They understand how to market these homes and what it takes to get a transaction to the closing table.
As for the others that occasionally list a bank foreclosure, there is one particular item that seems to be an obstacle on a lot of transactions. That is the need to have the utilities all on for the appraiser. For some reason most agents think that because they put the little words "AS IS" on their listing or on the Purchase agreement, they don't need to turn on utilities. A few points for you to consider:
- Legal definition: AS IS - adj. description of a condition in a sales contract in which the buyer agrees to take the property (e.g. house, horse, auto, or appliance) without the right to complain if it is faulty. However, the buyer must have had the right to reasonable inspection, so that he/she has a chance to find any obvious deficiency.
- On the Indiana Purchase Agreement - Unless you noted in writing to the contrary (that your client signed) the below verbage is on there. "As is" does not exclude this..
- The Bank : Unless you are marketing this home as cash only or a FHA 203k rehabilitation loan. The appraiser will need to document the condition of the mechanical's. Obviously, they can not do this without utilities. No complete appraisal - no loan....
- Realizing that there are times when this is not possible. Like when the previous owner took all the faucets, water heater,light fixtures, etc. Then it is a complete waste of everyones efforts to not market it this way as cash or rehab. loans only. Even if you find a naive buyer and inexperienced agent, unless they are paying cash, this will be an issue 2 - 3 weeks into the deal, when the incomplete appraisal comes in.
- If your client (bank) is adamant about not turning on utilities, deal with this in writing at the time of negotiations. Not simply stating "as is" because that doesn't mean that you will not turn on utilities. It means that you are not fixing anything.
If this issue is going to end up being a deal breaker, it might as well be killed at the beginning, instead of 3 weeks into the transaction. That's when everyone is blaming everyone.
As a agent on the buyers side, it would be advisable to have this specific conversation with the listing agent in order to confirm that will be handled.
Curious if any Realtors or loan originators here on AR have had to deal with this stalemate and how you handled it?
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