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.