My New Blog

Because it has garnished so much exposure in the media and online, I thought I would relate a bit of my experiences in dealing with buyers intent on buying a foreclosure. After all, isn’t it within us all to try and steal a deal, and although it might appear cold and unfeeling, it’s really the banks that will pay the interim penalty. Lest we forget, banks seldom loose, and somewhere down the road the largest offenders in this mortgage crisis will find a way to recoup their losses.

Buying a property under foreclosure is no different than any other purchase, provided the agent and the buyer have done their homework. After all, we’re dealing with a viable buyer?, an anxious seller?, and working professionals acting as liaisons. The current foreclosure market has a wide cross section of properties across the region. Connecticut ranks 8^th nationwide for number of foreclosures.

Prequalification: First, the buyer MUST be pre-qualified through a qualified lender. Written into a typical bank addendum will be a per diem penalty clause that can be as much as $200 per day for every day the transaction takes to close beyond that which was written into the contract by the agent. The buyer’s argument will always be that the agent should have known what is necessary to get the deal done, and they will be right!

Pricing: It will also be the agent’s responsibility to make sure that the property is at least priced right. After all, with the sub prime mess, and overly greedy lenders refinancing homes at 110% of their value, it’s possible that the home will never appraise, and who wants to waste all that time. Also, as some properties are on the market longer, current sales could be well below the asking price. To support this theory, the agent should be proactive for the bank and submit some recent sales to support the offered value. It should be understood that the people reading the offer on the other side of the transaction may be hundreds of miles away and have not been given a recent brokers appraisal of the property.

Pre-Inspection: If the buyer has some acquaintances with some building or remodeling it wouldn't’t hurt to have them come along to offer an insight into cost to fix the remnants of frustration left behind by the person that lost the house. Of course, the bank will always allow an inspection for information purposes, only, but why spend the money if the cost is beyond their abilities. Having touched on for information purposes only, I should also add that I have encountered instances where the bank was unaware of a problem and even though they didn’t want to concede, they realized that it was in order because of the nature of the repair. My last foreclosure experience got a $20,000 credit to the buyer for water damage created by the overseer of the listing not checking for open windows.