Important Facts About Buying Bank Owned Properties
Prospective purchasers of bank owned properties (REO's), are hereby advised of the following:
1. The bank or lender that owns the property may require that you sign and agree to the provisions of an Addendum to the purchase agreement.
2. These bank owned properties are sold "as-is", without any inspections or disclosures provided by the seller.
3. Addendums are prepared by a lawyer representing the bank. Guarantee Real Estate is a licensed real estate broker and is not responsible for, and is prohibited as a matter of law from explaining or advising you regarding the legal ramifications of the Addendum. If you agree to the Addendum, you are strongly advised to seek the advice of a lawyer or tax consultant, prior to signing.
4. You may risk the return of your initial deposit or any money delivered into escrow if the transaction is not consumated or escrow does not close. The release or return of funds delivered to escrow can only be released by the mutual, written agreement of the buyer and seller, typically emodied in escrow cancellation instructions.
5. Most Addendums include a "per diem" charge which is a fee charged to the buyer for every day the deal is not consummated/closed, beyond the date agreed to for the close of escrow, regardless of which party caused the delay in closing the escrow/consumamation of the purchase agreement.
6. Some banks or lenders may not be duly licensed California corporations or foreign (out of state) businesses, which may create difficulties in filing suit or recovering monetary damages (or return of your deposit).
7. You can attempt to negotiate the removal of the Addendum or certain provisions thereof, including per diem charges, prior to executing the Addendum. Most banks or lenders will not negotiate the removal of the Addendum or any provisions thereof.
8. If you agree to the Addendum, make sure you read it carefully and proceed with diligence in performing your obligations under the purchase agreement and Addendum thereto.
9. If you agree to pay a "per diem" fee, be sure you, your lender and your Realtor act diligently. If possible, avoid making changes to the purchase agreement or escrow instructions, which may cause a delay in the transaction closing or being consummated.
10. If the bank or lender, or escrow company causes delays in the transaction, make sure either you or your Realtor send and email, fax, or letter to the listing agent representing the bank notifying them of the delay, the cause of the delay, requesting a waiver of the per diem and enclose an Addendum waiving the per diem and granting an extension of time to close escrow, sot he per diem fee can be addressed by the parties, for the bank or lender's signature. Also, send email, fax or letter wtiht he ddendum to the escrow officer, signed by the bank or not.
11. If you refuse to pay the "per diem" fee, regardless of which party caused the delay, you must notify the escrow officer that you will not close escrow unless the per diem fee is waived by the bank. While not required, such notification should be in writing, with proof that it has been transmitted.
12. All contracts for the purchase of real property must be in writing. If a verbal acceptance of your offer is transmittd to you, in most cases it is unenforceable and you do not have a contract for the purchase and sale of the property, or the right to compel performance of the bank by court order, unless you received you offer, signed by the bank and all contingencies have been removed.
Tips In Making Offers On Bank Owned Properties
1. Buyers must be "pre-approved" for financing in advance, and submit a letter of pre-approval with the offer. If the buyers are paying all cash, provide a bank statement or proof of funds at time of offer.
2. Be prepared to have the property inspected by a professional home inspector at the buyers expense. Bank owned properties are sold "as-is" and they are exempt from providing any disclosures. Buyer beware!
3. Buyers must be patient, and expect 3-5 days for a response to their offer.
4. If there are multiple offers submitted, expect a counter offer requesting a final "highest and best" offer.
5. Make the offer clean, and without any contingencies of another sale closing.
6. Banks will negotiate on price and many times will pay some of the buyers closing costs, but they are looking at their highest "bottomline" net cash at closing.
