March 2008 Archives
Trying to evaluate the condition of the property is real tricky with bank owned properties especially in the winter with the properties being winterized. The likelihood of getting the heat turned on by the lenders is not good especially if it's a hot water system. So, you won't know for sure until after you close on the property how much damage there is to the plumbing. Many lenders will not de-winterize the property but many will let you do it as long as you winterize it if you don't buy it. This puts the buyer in the interesting position of doing work on a property that they don't own. Who is liable if the buyer's contractor floods out the house? Beats me.
Some sellers won't make the offer contingent on a home inspection so the buyer has two choices. Buy the property without inspecting it or pay for a home inspection before negotiating further and without a written agreement. Given these two choices I recommend the later.
I had a buyer start negotiating on a property and they wouldn't make it contingent on a home inspection. They also rejected the price and wanted close to asking price which wouldn't have made sense if the house needed many big ticket repairs. But, without the home inspection how do you know the extent of the damage. They also would not de-winterize the house. The buyer went ahead with a home inspection anyway. Even, without the heat, electric, and water running the home inspector uncovered so many other defects in the property that it didn't matter. It turned out that the boiler was rusted through so it wouldn't have fired up anyway and the electrical panel was fried which is why the electric wasn't working. The buyer realized his original bid was too high so we broke off negotiations and the buyer passed on the property.
The sellers of bank owned properties are not making it easy for buyers to properly evaluate the condition of the property. They want to pass their headache onto you with as little work and cost on their part. My feeling on this is that if you are going to take on the added risk of buying a bank owned property the rewards need to be very high otherwise why bother.
Some sellers won't make the offer contingent on a home inspection so the buyer has two choices. Buy the property without inspecting it or pay for a home inspection before negotiating further and without a written agreement. Given these two choices I recommend the later.
I had a buyer start negotiating on a property and they wouldn't make it contingent on a home inspection. They also rejected the price and wanted close to asking price which wouldn't have made sense if the house needed many big ticket repairs. But, without the home inspection how do you know the extent of the damage. They also would not de-winterize the house. The buyer went ahead with a home inspection anyway. Even, without the heat, electric, and water running the home inspector uncovered so many other defects in the property that it didn't matter. It turned out that the boiler was rusted through so it wouldn't have fired up anyway and the electrical panel was fried which is why the electric wasn't working. The buyer realized his original bid was too high so we broke off negotiations and the buyer passed on the property.
The sellers of bank owned properties are not making it easy for buyers to properly evaluate the condition of the property. They want to pass their headache onto you with as little work and cost on their part. My feeling on this is that if you are going to take on the added risk of buying a bank owned property the rewards need to be very high otherwise why bother.
I have a few buyers looking at bank owned property so I have been looking at a lot of bank owned property. We also have been writing offers. Most unsuccessfully. Though yesterday I had a buyer close on one. Even that had glitches occurring right at the closing. During all of this I have come up with some thoughts on what actions by the buyer will help you have a successful outcome. I'll post these thoughts in different posts going forward from today.
The first thing you have to have is a laid back attitude and faith it will work out and that some of the people you are dealing with will do most of what they say they will do. Otherwise, you will drive yourself crazy and the frustration will put you into an early grave. Many of the actions of these lenders/sellers doesn't make sense to a normal, rational person. You just have to keep reminding yourself that these are the same people who caused this mess in first place so why should they act more rationally now.
The paperwork is heavily written in the seller's favor. It seems like they can do whatever they want even though you have a signed contract but if you deviate from the contract they can come down on you. So, my first piece of advice is to make sure the addendum caps your losses to your deposit and they can't come back after you for more money. This is called liquidated damages. Therefore put as little money down as possible. Let, me repeat put as little money down as possible. That way if the people you are dealing with, and there are several layers of bureaucrats between the buyer and seller, end up not doing what they said they would you can pull the plug on the deal and only lose your deposit.
The first thing you have to have is a laid back attitude and faith it will work out and that some of the people you are dealing with will do most of what they say they will do. Otherwise, you will drive yourself crazy and the frustration will put you into an early grave. Many of the actions of these lenders/sellers doesn't make sense to a normal, rational person. You just have to keep reminding yourself that these are the same people who caused this mess in first place so why should they act more rationally now.
The paperwork is heavily written in the seller's favor. It seems like they can do whatever they want even though you have a signed contract but if you deviate from the contract they can come down on you. So, my first piece of advice is to make sure the addendum caps your losses to your deposit and they can't come back after you for more money. This is called liquidated damages. Therefore put as little money down as possible. Let, me repeat put as little money down as possible. That way if the people you are dealing with, and there are several layers of bureaucrats between the buyer and seller, end up not doing what they said they would you can pull the plug on the deal and only lose your deposit.
