As more and more people have come back into the marketplace in search of good deals on foreclosures (REO’S) the lenders find themselves in an interesting position…one in which they now have leverage since they’re experiencing the impact of multiple offers. Here’s a few things you can count on when buying a foreclosure:
* The lender usually has little or no knowledge of the property, thus they don’t have to complete a transfer disclosure statement. On all of their addendum’s they will make really clear that 1) they don’t know anything and 2) you’re buying the place in “As Is” condition.
* The lender can take their sweet time in responding to your offer…and in the meantime consider and accept other offers.
* The lender can, and will, give you a verbal acceptance of your offer…but they aren’t binding. You really are not in contract until the paperwork is returned to you and that could take 2 or 3 days.
* The lender will give you a long addendum, before they send you the signed contract, that their lawyers have drafted and it leans heavily on protecting them. It’s not uncommon for a lender to impose a per diem charge for delays in closing. If you buy a house for $530,000 your per diem is $530.00 per day for every day you are late.
* Many lenders refuse to pay all or many of the expenses of escrow and closing that are typically paid by sellers.
* In some cases the lender will receive a 1% rebate from the commissions that they themselves are paying to sell the place…now that’s leverage!
It’s a brave new world, huh? The more buyers come back into the marketplace in search of bargains on homes, the more leverage these lenders will have. It pays to be conscious of these issues should you be ready to jump into this segment of the market.
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