Buying Foreclosure Income Property?

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Real Estate Agent with Coldwell Banker Residential Brokerage

Hi all, Wow! It has been a long time since my last blog. I have been extremely busy working with clients that are taking advantage of the foreclosure market.  Having completed numerous transactions I want to pass on some helpful information. Here is a list of some key points to understand.

1. Fully explain the buying process to your client PRIOR to seeing property. Make sure you explain that each lender of a foreclosed property will act differently.  Some lenders will have strict guidelines. Ask from the listing agent a copy of the P & S and addendums.  Some banks will pass additional costs to the buyer.

2. Don't waive your home inspection! Despite the property being "as is" sold "where is" your client can effectively use the inspection to negotiate sales price, closing costs and pre paids and terminate the contract.

3. Hire your own attorney!  Make sure you have a clean title. The reason is quite simple. Many of the "bad loans" have been bought and sold numerous times in "package deals' consisting of multiple properties. A bank that misses to record a mortgage discharge might not own the property when you go to closing!

4. Per diem charges. Some banks will charge a daily fee in the event the buyer doesn't perform on the closing date due to problems with financing. Make sure that the lender/ loan officer is aware of this clause because it can cost thousands of dollars to your client has problems with under writing, appraisals, and any other issues.

5. Last but not least, demand that all electricity, water and sewerage and outstanding utilities are paid by the bank prior to closing and that these items are up and running during the home inspection. This may sound silly but properties that have been "winterized" may actually be damaged beyond a buyer's ability to repair or replace.

Hope this helps.

 

 

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Rainmaker
55,145
Nyles Courchesne
Peskin, Courchesne and Allen, P.C. - Springfield, MA
Massachusetts Real Estate Attorney

Some of this seems to be common sense! Yet, there are so many agents out there that do no inform their clients of the process. Overall this can lead to unhappy customers!

Sep 17, 2008 02:56 AM #1
Ambassador
2,138,502
Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

Getting the utilies turned on is like pulling teath sometimes, but you are so write that if you don't explain the process of buying a foreclosure property, I promise at the end of the transaction, you won't be getting any referrals from that client.

Todd Clark, Helping Families Home - www.IFoundYourNewHome.com

Dec 24, 2008 02:19 AM #2
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Rainer
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Michael Ross

North Shore of Boston
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