Please
read this helpful information concerning
submitting an offer on a bank owned property. It will answer many of your questions ahead
of time.
1. Financing terms or lenders CANNOT normally be changed
after the contract is executed. Unlike a “normal” seller, Banks will take
issue with a Buyer changing lenders ½ way through the transaction, or coming
back and deciding to “roll in” closing costs.
Have a discussion with your loan officer AHEAD OF TIME and write the
contract to the actual financing terms that will be used. Do not be surprised if changes are refused
later in the process.
2. Lowball offers are almost without exception rejected. Banks do not
waste their time countering ridiculous offers so be wise with your time. The Bank has 2 Realtor opinions and a formal
appraisal done prior to listing, which is how they determine their price. They are aware of the condition of
the property and sales are to be made AS IS, WHERE IS.
3. Personal property is NOT included in the sale. If there are
appliances in the property, they may or may not be there at closing. Please understand that it is a BONUS if they
are still there and not to count on them, although naturally they normally will
be there. However, the Bank will NOT
allow any personal property in the purchase agreement, so assume appliances are
not included. If there is other personal
property, it may or may not be there at closing, but do not assume it will be
removed unless specifically stated in the PA.
4. Closing dates should be between 30-45 days from
acceptance. If you set a closing
date further out, the Bank will most likely counter it with a sooner closing
date, so if at all possible, set closing dates during this timeframe,
preferably 45 days to give time for negotiations although they may counter with
less. This will simplify the
negotiations and strengthen your offer.
In addition, some Banks CAN NOT or WILL NOT close more than 30 days out
no matter what the offer is. If at all
possible, please base your offer, whatever that might be, and whatever
concessions need to be factored in, on a 30-day or less close. The opposite is true as well. Some clients CAN NOT close less than a
certain number of days and will counter accordingly, so don’t be too surprised
if they push the closing date out.
Normally once the offer is accepted, the Bank will provide a
counteroffer addendum with a firm closing date.
5. At any given time there may be and most likely are
other offers on the property in various stages of negotiation. You may or
may not be informed of other offers.
Always put forth your best offer.
Once an agreement if fully executed and ALL contingencies are removed, the
property will be “pended” showings will no longer be allowed.
6. Once an offer is verbally accepted, the original
contract must be delivered promptly. Originals of the purchase agreement and the
earnest money must be delivered right away.
Normally, these must be sent overnight to the Bank so please complete
ALL originals immediately!
7. The client will require a per diem. The Bank will
require a per diem penalty if the closing does not happen on time through no
fault of the seller (ie delay with Buyer’s mortgage company, etc.) The per diem
is typically $100, so read the counteroffer addendum carefully once it arrives.
8. If the property is winterized…. And you
choose to do an inspection, the de-winterization of the property MUST BE NEGOTIATED if desired
for the inspection. Some Banks will not
de-winterize property for any reason, and some may require the property be
re-winterized after the inspection. It
would then be your responsibility to de-winterize the property after closing.
9. Please do not ask me call the Bank’s agent to justify
your price or plead your case on the home’s condition. The Bank’s
agent knows the condition and is communicating it to their client. They know!
The Bank often has 2 CMA’s and a formal appraisal completed before deciding
on its list price. The property is
priced to sell AS IS.
10. Due diligence is strongly recommended on the property. Much of the
property information is from a previous MLS listing and/or county tax
records. – BUYERS ARE RESPONSIBLE FOR
VERIFYING ALL INFORMATION. A
home inspection is always highly recommended.
The Bank will clear any title issues and pay outstanding bills, but any
other matters are your responsibility.
Verify all measurements and information at all times; this includes
potential association dues, covenants, and city regulations Remember, you will be signing paperwork that
releases the Bank from all responsibility, so do your homework!
11. Most Sellers require that you use their title
company. Because title is opened when the file is
assigned, and because there may be title issues to clear, the Bank prefers and
often requires that the Buyer use the Bank’s title company.
12. Repairs may be requested but are normally rejected. Please write
your offer AS IS. If you request
repairs, we must get estimates / bids ahead of time to submit with your offer
for the best chance of acceptance. The Seller
ALWAYS prefers and often requires an AS IS sale, but inspections are fine and
actually encouraged. Or, consider a Home
Warranty!
13. Water bills and other liens will be paid by the
Seller. You may find out that there are large water
bills or other liens against the property.
Don’t fear! The Seller does
extensive work to clear the tile, and these bills will be paid, normally at
closing by the Seller.
14. DO NOT PUT TIME LIMITS IN THE PURCHASE AGREEMENT. Doing so will
not speed up the process; all it does is cause more trouble if that timeframe
passes and they still need to get initials, etc. – remember another offer can
be accepted at any point until all signatures and initials are received, and
you could lose the property over this technicality! Putting a time limit in your PA will not make
things move any faster.
15. PLEASE ENSURE THAT EVERY – EVERY – SIGNATURE AND
INITIAL IS PRESENT! These Sellers do not appreciate chasing
initials and signatures and have advised their representatives NOT to present
any offers that are not complete and do not include every required page,
initial and signature. Check and double
check your PA.
16. ADDENDUMS OR AMENDMENTS MAY CAUSE DELAYS. When an
amendment or addendum is later needed, please be aware that getting these
documents returned with seller signatures will take a few days, and with some
sellers, will take a few weeks. It’s
best to get all terms negotiated up front, if at all possible, to avoid delays
in closings.
Definitions in the Foreclosure
Process