Friday, March 20, 2009
Patience is a Virtue in REO negotiations
Dear Sue,
Two weeks ago I made an offer on an REO property. The listing agent called my agent and said that my offer was accepted. We waited for a signed offer but nothing came. My agent called and was told that we needed to provide a direct lender approval letter before escrow could be opened.
It took my loan Broker six days to get an approval letter from a direct lender ( the lending institution itself). The listing agent received it four days ago. The listing agent said that she had everything that she needed. She said that she would be getting back to my agent as soon as she gets something in writing from the seller.
All of this verbal communication sounds very fishy to me! I have bought and sold several properties in my lifetime and have never had the buying process take so long. It also concerns me that none of the communication is in writing.
Why is buying an REO so different than buying from a private party? How can our agreements be enforced if none of them are in writing?
Concerned Cal
Dear Cal,
According to the California Association of Realtors legal minds a buyer just has to take their chances when purchasing an REO (Real Estate Owned) property. There is no law that states that real estate negotiations must be in writing.
The final agreement must be in writing in order to be enforceable.
As for the time that these negotiations often take, I suggest being patient. Do everything you can to be prompt with their requests. Remember, if a more desirable offer comes in during the coarse of your negotiations you could be out of luck.
The REO agent usually spells out in the listing what the seller’s offer requirements are. I would suggest reviewing those instructions and presenting your offer as requested. Do what you can to keep your offer clean and simple. Of course, the best offers are all cash with short escrows!
I have never seen a lender sign a CAR residential purchase agreement. They almost always counter with their own purchase agreement addendums. I suggest that you read that addendum carefully.
You need to focus in two areas. The first is the method in which you remove your inspection contingencies. The CAR (California Association of Realtors) contract requires that the buyer remove all contingencies in writing. The REO addendum usually changes that by stating that if the buyer goes beyond the stipulated time frame, the contingency is automatically removed.
The second area of concern is the penalty for going beyond the agreed upon closing date. The usual charge is $100.00 per day. I recommend that you stay on top of your escrow closing. If the escrow is going to be delayed for any reason I would suggest getting a written escrow extension thereby avoiding the penalty.
While this process can be frustrating and unpredictable, it can also be very rewarding. In fact, it can be a matter of good Home $$’s and Sense.
Two weeks ago I made an offer on an REO property. The listing agent called my agent and said that my offer was accepted. We waited for a signed offer but nothing came. My agent called and was told that we needed to provide a direct lender approval letter before escrow could be opened.
It took my loan Broker six days to get an approval letter from a direct lender ( the lending institution itself). The listing agent received it four days ago. The listing agent said that she had everything that she needed. She said that she would be getting back to my agent as soon as she gets something in writing from the seller.
All of this verbal communication sounds very fishy to me! I have bought and sold several properties in my lifetime and have never had the buying process take so long. It also concerns me that none of the communication is in writing.
Why is buying an REO so different than buying from a private party? How can our agreements be enforced if none of them are in writing?
Concerned Cal
Dear Cal,
According to the California Association of Realtors legal minds a buyer just has to take their chances when purchasing an REO (Real Estate Owned) property. There is no law that states that real estate negotiations must be in writing.
The final agreement must be in writing in order to be enforceable.
As for the time that these negotiations often take, I suggest being patient. Do everything you can to be prompt with their requests. Remember, if a more desirable offer comes in during the coarse of your negotiations you could be out of luck.
The REO agent usually spells out in the listing what the seller’s offer requirements are. I would suggest reviewing those instructions and presenting your offer as requested. Do what you can to keep your offer clean and simple. Of course, the best offers are all cash with short escrows!
I have never seen a lender sign a CAR residential purchase agreement. They almost always counter with their own purchase agreement addendums. I suggest that you read that addendum carefully.
You need to focus in two areas. The first is the method in which you remove your inspection contingencies. The CAR (California Association of Realtors) contract requires that the buyer remove all contingencies in writing. The REO addendum usually changes that by stating that if the buyer goes beyond the stipulated time frame, the contingency is automatically removed.
The second area of concern is the penalty for going beyond the agreed upon closing date. The usual charge is $100.00 per day. I recommend that you stay on top of your escrow closing. If the escrow is going to be delayed for any reason I would suggest getting a written escrow extension thereby avoiding the penalty.
While this process can be frustrating and unpredictable, it can also be very rewarding. In fact, it can be a matter of good Home $$’s and Sense.
# posted by Sue Thompson @ 7:32 AM 
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