Wow! Is that a mouthful. For the life of me I do not understand why they (the people that put together sales systems for foreclosure properties) seem to want to make things more difficult and risky for the average home buyer or investor.
Today I was reviewing a contract to be used on the newest surge of foreclosure property sales and chatting with one of their experts online. Some of the questions and answers I got from their staff: Who pays for the title policy? The reply was it’s split like all the closing costs… Upon reading the 28 page contract I found that it was stated (unclearly) that the seller will provide the title policy. When I questioned the chatter he said “oh then whatever the contract says”….whew!
Next it states that the contract is not subject to the buyer being able to obtain a loan or verifying the condition of the property….so if your loan fails for any reason (and we’re talking a seriously fluxtuating mortgage business), you sacrifice the required earnest money of $5,000 so the chat expert says. Oh yes, we can all afford that kind of risk. Usually there would be 2-3 weeks to finalize the buyers loan.
And, if you were to figure out the house is going to be a serious money pit after further investigation (a typical 5-10 day “discovery/option period” does NOT exist) after you have the property under-contract, then you also forfeit your $5,000 earnest money. Wow. Better get that inspection done prior to contract… when you know there are multiple-bidders so you have less than a 50/50 shot to actually contract the property going in?
Do they presume this is the type of risk the average guy can take? Seems like a plan to side-step the normal guy and sell to serious risk takers in order to make it easier to unload these properties quickly. Does speeding up the transaction 2-4 weeks actually make that much difference? Do they get as much money as they would if they allowed a normal option period?
And, as a personal slight to me, they pay REALTORS a paltry sum of 1% to help people out with this. What’s that all about? Saving money or paying an online auction site and their chatters? When I asked the chat expert if he thought the contract was a little slanted, his comment was; “it is a seller contract”…ok. So that means there is no buyer involved? Buyer be ware!
Upside: If you have a thick skin and can handle this risk, it is an opportunity to capitalize on. It’s all designed for speed rather than bottom line.