Andre L. Allen, REALTOR®, e-PRO

7. All Properties are Sold "AS IS"

The bank has already lost a significant amount of their investment in these properties and are not willing to negotiate repairs. There are usually no allowances for carpet, lighting, paint or other issues with the home.

All buyers are advised to have a home and termite inspection to determine the condition of the home. There is also a pre-negotiated "due diligence" period in which that inspection must take place. (See yesterday's Blog on "Time is of the Essence") Banks are seldom willing to extend that period, so you must complete your inspection within that allotted time. It is after the inspection that the buyer can make an informed decision about whether or not to purchase the home "as is".

Eventhough banks are not in the "real estate" business and would prefer not to have distressed properties on their books, they are also not in the home improvement business. So trying to negotiate repairs could make your offer appear less attractive than other presented on the property. Asking for "less" could get you "more".

If you are thinking of buying or selling a home, contact Andre Allen, REALTOR® with Keller Williams Realty - Atlanta Partners servicing the real estate needs of Metro Atlanta, GA. Contact me at (678) 252-2959 or AndreAllen@kw.com.

6. Time is of the Essence

Once, the contract is "binding" meaning both sides have agreed to the terms and signed all documents, time is of the essence. The bank will typically allow 7 days for the buyer to inspect the property. This is called the "due diligence" period. If the buyer wishes to terminate the contract during this period, earnest money will be returned.

The bank can also specify a time period in which the Buyer is required to obtain a "commitment letter" from their lender. This means that all inspections must be completed, as well as the appraisal. If this letter is not provided by the specified date, the bank can choose to terminate the contract. It is your responsibility to make sure your lender is aware of this contract provision.

When your offer becomes binding, this is where the rubber hits the road. Everyday of your due diligence period has to count and be purposeful or it can cost you your earnest money and the contract. The team of your real estate agent, lender, appraiser, inspector, insurance agent and closing attorney needs to be communication for scheduling activities in order to meet (I prefer beat) deadlines.

If you are thinking of buying or selling a home, contact Andre Allen, REALTOR® with Keller Williams Realty - Atlanta Partners servicing the real estate needs of Metro Atlanta, GA. Contact me at (678) 252-2959 or AndreAllen@kw.com.

5. The Bank Sets the Rules

Making an offer on a bank owned property requires that you submit "proof of funds" for cash offers, or a "pre qualification" letter from either the bank specified lender or your lender of choice. Additionally, the bank can require that you be pre-qualified by their specific lender. That does not mean you have to borrow money from them, it just means that they want to be sure that you have the means with which to purchase the property.

As an example, if Wells Fargo or Bank of America holds the property, then they may want a pre-qualification letter from a Wells Fargo or Bank of America lender, specified either in the listing or in the bank contract. This is done for two reasons: 1. They trust their own lending guidelines; 2. They want the opportunity to generate more business. While the seller(the bank) cannot legally insist that the buyer use a particular lender, they still want an opportunity to compete for the business.

Always keep in mind that the bank sets the rules. If you would prefer to kick sand in their sandbox, rather than play within it, you run a higher risk of your offer not being considered or just simply rejected.

If you are thinking of buying or selling a home, contact Andre Allen, REALTOR® with Keller Williams Realty - Atlanta Partners servicing the real estate needs of Metro Atlanta, GA. Contact me at (678) 252-2959 or AndreAllen@kw.com.

4. Banks Have Their Own Contracts

Your offer to purchase the property will be written on a Georgia Association of Realtors (GAR) Purchase and Sale Agreement, which is the common form used in real estate transactions in Georgia. However, once all terms of the offer have been accepted by the bank, they will issue their own contract and addendums. These are legal documents in the state of Georgia, and supercede the forms submitted by your Agent.

The addendums clearly define that the property is being sold "as is" and release the bank from all responsibility regarding condition. There is usually very little negotiation concerning the bank addendums.

I hope you are finding this information informative and are getting a better understanding of the process of purchasing a foreclosed property.

If you are thinking of buying or selling a home, contact Andre Allen, REALTOR® with Keller Williams Realty - Atlanta Partners servicing the real estate needs of Metro Atlanta, GA. Contact me at (678) 252-2959 or AndreAllen@kw.com.

3. Multiple Offer Situations

Banks are choosing with increasing frequency to price their foreclosed properties for a quick sale. A good deal is difficult to resist, and you will not be the only Buyer that is interested in taking advantage of a good deal. (FYI - If you like it, are interested in it or think it's a good deal, there is a great chance that someone else does too.)

You have to be prepared to write an offer that day, or you may find that the property is no longer available. That means, having a pre-qualification letter and earnest money in hand. When a home is in good condition and the price is right - there WILL be multiple offers. In those situations the Listing Agent will send out a request to all the Buyer's Agents calling for "highest and best". At this point the buyer will have one opportunity to formulate an offer that with either be accepted or rejected. There are no second chances! (Technically, this is your second chance.)

It is not unusual for a Buyer to choose to go well over the list price with their offer, particularly when the property was originally listed at a price considered to be under market value. Make sure that your offer is your "highest and best", and that you know you couldn't have offered more. There are no second chances!

Have you ever been in a multiple offer situtation? If so, I would like to know your thoughts and feedback.

If you are thinking of buying or selling a home, contact Andre Allen, REALTOR® with Keller Williams Realty - Atlanta Partners servicing the real estate needs of Metro Atlanta, GA. Contact me at (678) 252-2959 or AndreAllen@kw.com.