Economic downturns
Throughout the course of my career in real estate, I have weathered several economic downturns. Each time there is a backlash of foreclosure market business, which isn’t necessarily a bad thing (especially if you are an investor).
I have been on both sides of representation, both working with the lenders as an REO agent and as a buyer’s agent for buyers looking for a deal.
Every bank owned property is listed in “as is, where is” condition. The lenders intend that the buyer should be aware that any inspections or investigation of the property is for edification only and will not result in repairs or compensation.
Lenders WILL participate
While it is true that most lenders will not participate in any form of credits at closing, it has been my experience that they WILL in fact participate in repairs to the property when asked.
I understand that every state has different laws and procedures, so this is just my experience in Massachusetts. Please contribute via comments on your state and the practices that you have experienced.
Especially over the last year and a half it has been my practice to at least ask for inspection items on foreclosure transactions and I have yet to be turned down.
Surprised? I was!
For example: a home in Springfield, MA that my buyer was purchasing had carpenter ants, plumbing issues and a broken window. The buyer was a single woman buying her first home and wasn’t comfortable with acquiring these repairs. After informing her that the bank had disclosed their “as is” standing, she asked me to submit a request for all of the items to be repaired prior to close.
I was certain that we would get a negative response to most if not all of the requests. Imagine my surprise when they said yes to all!
My point here is that it doesn’t hurt to ask. Inform your client that it is a long shot and that they will most likely say no, but submit the reasonable requests that you would submit on any other transaction. Then come back here and share with us if your experiences match mine!
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Wonderful to learn about the power of asking! After all, there’s nothing to lose in this type of situation.
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Lesley, we have had banks make repairs too. Not all the time but some of the time. No harm in asking.
Lesley,
Whenever we deal with a bank/lender we know and that’s local they will generally do it. But it’s good to know that it’s worth asking outside lenders too.
Thanks for the info and do that from now on……
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Don’t “ASK”, you don’t “GET”. Can’t hurt. If the answer is “no”, you’re simply in the same place you were before, no harm, no foul.
Cheers.
In GA, our contracts are all as-is unless you include the financing contingency, appraisal contingency, right to request repairs, and anything else you are interested in.
We use a Due Diligence period, either along with those contingencies or w/o those contingencies. Whatever makes sense.
The best way to think of as-is in GA is that it may be as-is, but you still get the opportunity to do all the inspections to determine what as-is IS!
Then, you can ask for repairs, etc., but the seller is under no obligation to address them. If they don’t and they are deal breakers, you simply terminate the contract under the due diligence clause.
That’s GA anyway. Pretty simple.
Rob in Atlanta
Thanks for your input everyone! It is always good to be pro-active, IMHO!