With regard to a "foreclosed" home, which means it is now owned by the bank, it is exactly like buying any other home with a couple of key differences:
1. The seller is a bank. They tend to be less responsive so don't expect a quick response to your offer, or to any issues that come up during escrow.
2. The seller has never lived in the property. As such their disclosures about the property are worthless, and they are going to make you sign something saying that you acknowledge that. Ultimately you can't "sign away your rights", but it is super important that you do your own thorough due diligence.
3. The property may be in need of repairs. Before the 2008 crash the banks almost always fixed up the property to market condition, now they do it in far fewer cases. Depending on how bad the condition is it may affect your ability to get financing.
4. Despite 3, there is NO requirement that your offer be all cash (contrary to another answer). Some banks may have a preference for all cash offers - but that is true of EVERY seller, bank or not.
5. Fannie Mae actually gives preference to owner occupants giving them a "First Look" where there offers are considered before investors. More on that here: Special Offers and Incentives.
6. There is a very small possibility that you'll be the subject of harassment or even a lawsuit by the prior owner. As a "bonafide purchaser for value" you don't have much to worry about despite stories to the contrary. Even if a court finds the prior owner was wrongfully foreclosed on, the legal standard is that you get to stay and the fact that the prior owner can't return to their former home is included in the calculation of damages they get from the bank. Even if a court somehow ruled otherwise, your title insurance policy would then kick in to protect you from financial loss.
Courtesy of Sean O'Toole, Property Radar
No comments:
Post a Comment