Beware of Addendums When Buying Foreclosures!

So I’ve spent the better part of a week and a half working with a buyer who was attempting to purchase a bank owned home. This home was built just two years ago on spec and never sold. It’s been for sale for two whole years! It was a great deal and an amazing house that my buyer has had his eye on for a long time.

Once priced at over $650K, it was down near $400K now and it still had that new house smell!

We agreed on price, by submitting a standard state contract and the bank verbally agreed to it and sent us their “addendum”. This is standard practice with bank owned property. This particular addendum was 10 pages long however, and was filled with some very seller sided perks.

Of course they are written in ‘legalese” so they are very hard to interpret. My buyer made a smart decision to consult an attorney about the addendums. The attorney found some very interesting items in there that no sane person would agree to.

The only people that agree to things like this probably don’t notice them and happily sign away, pysched about getting a great deal! A few weeks down the line, they may find themselves with a compromised title, out of the contract without their earnest money or ready to head to closing only to find out that the bank has recieved a higher offer that morning and you no longer have the right to purchase it. (All that stuff can be hidden in the fine print)

The point is, that as a buyer you have a lot of choices out there and it’s easy to lose sight of that when faced with a great deal on a foreclosure.

Here’s my advice: ALWAYS CONSULT AN ATTORNEY WHEN DEALING WITH BANK DRAFTED CONTRACTS OR ADDENDUMS! Call the attorney you plan on using for closing. They will sometimes even do this service for free if you end up closing there.

Sometimes…….