6 tips about buying foreclosures

Buying a Metro Detroit foreclosure is easy.   But it does have a few pit falls. “As is”   Banks are selling the home as is.  What that means is… what you see is what you get.   The bank is not going to put money into the house.  The only reason the bank will put money into the home is for the home to become mortgageable.  What I mean by that is that the bank usually requires the furnace and water to be running.  So if the water pipes have burst the bank will hire a plumber to make sure it can pass the mortgage appraisal inspection.  The bank is not going to fix a lot of things.  You can ask but most likely they would rather lower the purchase price or sell it to a cash buyer.

Bank addendums.   There are pages of bank addendums.  They only protect the bank.  You can’t change them, can’t cross something off, or rewrite them.  You sign them as is or you don’t buy the house.  It is that simple.  The bank addendums protects the bank from anything that may or did happen. Late charges in the addendums.  In many bank addendums there is a per Diem fee for everyday you are late on closing.  So read what that late fee might be.  Sometimes it is a much as $150 a day.  So be sure to give yourself extra time to get your mortgage closed by the specified date on the purchase agreement.   They don’t care about excuses and the addendum late fee will cost you.

Sellers disclosures.   Banks are exempt from filling out sellers disclosures.  They have never lived in the house so Michigan law exempts them from filling out the disclosures.  So you really can’t find out much about the house history.  Even if the water pipes burst, or the roof leaks while the bank owns it they don’t have to fill out disclosures.

Multiple Offers.

If the bank gets more than one offer on the property it will ask for “highest and best offer”.  What highest and best offer means it the buyer has one chance to give the highest offer they can or want to afford.  They can stay at the first price they went with or they can raise it.   Some listing agents do lie about multiple offers but you don’t know.

Signed deal.   A deal is not a deal until everybody signs it.  A verbally accepted deal doesn’t mean anything.  It will not stand up in court.  It has to be signed by everybody before it is done.  If another higher offer comes in before your offer gets signed the bank can take the other offer.  They don’t have to do “highest and best” offer.  They can just accept one offer over another. I hope this gives you a little idea of what to watch out for and what happens in the metro Detroit foreclosure buying process.

Russ Ravary your Metro Detroit real estate agent.

Join my Metro Detroit foreclosures club to get the latest foreclosures emailed to you.  So you don’t miss out on the best deals when they hit the market.  You can also search foreclosures right away once you join.

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