Things to know when consider buying a foreclosure

1. The Buyer and Agent realize that the negotiation and purchase process are different for Bank Foreclosures (REO) properties. Understand that additional patience and cooperation are required and appreciated.

2. Offers contingent upon the sale of an existing home will not be considered. All offers must be neat and legible. It may be necessary to re-write the contract in its final form for the Buyer’s signature.

3. Certain banks as noted on the MLS, have instructed the listing office to fax to the selling agent their required addendums so that the Buyers can review and sign these forms at the same time they are writing their offer. These offers cannot be submitted without these bank required addendums.

4. Buyer and Buyer’s agent acknowledge that Buyer’s Agent has shown the property to Buyer and both have viewed the property prior to submitting an offer. Further, the buyer acknowledges that the property is being sold "as is, as seen, where is".

5. Usually the Seller does not pay for an appraisal, any repairs, or inspections. No warranties are offered.

6. Offers to purchase are presented to the Seller by Fax or e-mail as per the Seller’s instructions. Due to time differences from state to state, scheduling constraints and Seller guidelines, Buyers agents will not be invited to be present for offers. Buyer’s Brokerage, Agent and Buyer understand that they will not be in direct contact with the Seller.

7. Offers to purchase are time and date stamped and presented to the Seller in the order received by the Listing Agent. The Seller will review subsequent multiple offers and will usually proceed to accept, reject, or distribute Highest and Best offer letters to each prospective multiple buyer. Verbal offers are not acceptable.

8. All offers to purchase must be accompanied by a complete pre-qualification letter. Some Banks require the Buyer be pre-qualified with a specific lender at no obligation or cost. The Buyer retains the right to use his current lender to obtain the loan; this qualification is for determining the best qualified Buyer only. The pre-qual bank requirement also pertains to cash buyers. That way if they choose to convert to a loan, they will already have this required pre-qual letter on file.

9. All offers, including cash offers must be accompanied by a verification of funds letter showing the buyers name, by the financial institution entrusted with holding their funds.

10. Offers to purchase will not be presented without the    appropriate pre-qualification and verification of funds documents mentioned above.  As well as a copy of the Earnest Money Deposit check.

11. The Seller/Bank does not provide the Buyers with a Seller’s disclosure.  The Buyer will be required to sign a waiver, hereby waiving their rights as per section 113.150#6.  Waivers are only accepted if signed and notarized. 

12. All property left on site is left "as is". 

13. Most institutional Sellers do not provide the CIC documentation or Resale Package as required by NRS 116.4109 and 116.41095.  Buyer and Buyer’s Agent are aware that they are responsible to obtain any and all Home Owner Association documents at the Buyer’s expense.  Under Nevada Law the Buyer’s sole recourse for not receiving these documents form the Seller is to cancel the purchase agreement.  Buyer is strongly advised to purchase, review and accept or decline the purchase based on the limitations of use under the HOA.

14. If offer is less than list price, negotiations may take up to 10 working days.  Acceptance of an offer to purchase is subject to approval by several levels of management within the structure of the Seller.   Anticipated time of acceptance of an offer is normally 2 days, however can on unusual occasions exceed 10 days.

15. Once notification of acceptance of an offer is communicated to the listing Realtor, the selling Realtor will be contacted.  Once acceptance is verbally communicated to you, you may rest assured that you have a deal.  A Seller’s signed offer will not be received by the Listing office for weeks and possibly not until the closing date.  The property will stay on the market, in the ER status, until this signed document is received by the listing office.

16. After you have received notification that your offer has been accepted, if you have not previously received the banks REO addendums, then you will receive them now.  The REO addendums must be filled oust and returned with all blanks completed or an N/A as applicable.  Changes, deletions or strike outs on any section of the Seller’s addendum are not acceptable.  Changes must be submitted in the form of an addendum and must be agreed upon by the Seller.  Copies of all contracts will be provided to you once they are received by the listing office.

17. You will receive a written notice that your offer was accepted, and you will need to deliver to the Listing office by the following business day, all originals- offer, counter offers, REO addendums, and earnest money check made out payable to the banks pre-approved Escrow Company.  The delivery of these documents is time sensitive.  If you do not deliver all these documents and earnest money on or before the time and date stated on the notice, your offer is subject to cancellation.  Some items may require a notarized signature.

18. Each bank has selected a pre-approved escrow company who is familiar with handling their required paperwork and procedures for an REO transaction.  Once you have delivered all of the originals and earnest money check to the listing office, the listing office will open escrow as required by the bank.

19. The Buyer’s due diligence period begins once you have delivered the signed addendums to the listing office.  At no time can the buyer have the utilities turned on in their name.  This can only be done after escrow has closed and the ownership of title has been recorded in the new Buyer’s name.  Buyer and Agent understand that the utility companies at their sole discretion may choose not to turn the utilities on due to property condition.   In extreme cases properties may even be vandalized. 

20. Buyer and Agent are also made fully aware that the close of escrow date in REO sales may change depending on the banks ability to complete many of the processes involved in selling a foreclosure property.  This situation usually involves title issues.  The Buyer needs to take this into consideration when locking in their loan/interest rate.  Also, for liability reasons Buyers should not schedule movers, change the locks or have utilities changed over until the escrow is closed and the title of ownership is in their name.

21. REO properties are obtained through foreclose and the bank does not have or supply the listing office with keys or garage door openers to give to the Buyer.  All REO properties are rekeyed to a master system which allows several people access to the property for cleaning, maintenance, lawn and pool services, etc.  In order for the Buyers to obtain access to the home after closing, they will need to schedule to have the locks rekeyed at their expense once they are on title as the owner.  Lock boxes and keys will be removed before closing.  Utility companies need to be contacted for uninterrupted service.

22. Most lenders are familiar with the banks procedures of not always providing signed acceptance of the offer right away and will proceed with the Buyer’s loan application and processing immediately based upon verbal acceptance.

23. Occupancy of the property by anyone prior to close of escrow will not be considered.

24. If Buyer is a Real Estate licensee, he/she may not be entitled to a commission.

25. Selling bonus or incentives offered on the MLS may be withdrawn without prior notice before being submitted to or accepted by the bank.

26. Bank owned properties present many challenges not normally experienced in a traditional real estate transaction.  This form should prepare you for some of the most common challenges faced today; however, there may be some issues that arise that are not noted herein. Buyer acknowledges that they have read and understand this disclosure and are choosing to pursue the purchase of an REO property despite the issues that have been outlined above.

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