Home Buying in Clearlake>Question Details

Peggy, Home Buyer in Clearlake, CA

why would the bank of an reo propertie want all contingencies removed or else, two weeks before closing?

Asked by Peggy, Clearlake, CA Sun Jan 10, 2010

What happens when there are no comps in the area for your apprasial....will the underwriter still accept

Help the community by answering this question:

Answers

4
Hi Peggy, the terms of your sales contract will determine the dates that require removal of any contingencies. Your real estate agent should be able to assist you with determining the seller’s expectations for removal of such contingencies.

Asking the buyer to remove their contingencies two weeks prior to the closing date is a protection for the seller against the buyer walking from the property towards the end of the contract time-line. Remember, the seller has taken the property off the market so that you have time to conduct your inspections of the property. And during this time the seller is unable to sell the property to any other buyer, even if they received a higher offer than yours. This is also your protection against the seller accepting another buyer’s offer.

However, once this time period that the seller allotted for the buyer to conduct their investigations (also known as contingency period) have passed, the buyer is expected to either release their contingencies – meaning that the buyer is completely satisfied with the condition of the property and is willing to move forward or risk their earnest money deposit - or cancel the contract. The seller needs to have the buyer commit to the sales contract once the buyer has conducted all their investigations especially if they have additional buyers interested in the property. Basically, by releasing your contingencies you are showing the seller good faith in purchasing the property by risking your earnest money deposit – if you choose the cancel the contract after your contingencies have been released then the seller has the right to take your deposit.

As far as lack of comparables, this will be up to the underwriter at the lender you have chosen to move forward with. Some lenders will be more lenient than others so I hope that your loan officer has explained your current lender’s guidelines for such a situation.

Also, please direct any specific questions about your transaction to those professionals whom you are currently working with. They will possess the most accurate answers, or be able to refer you to other professionals who can better assist you with your needs.

Hope this helps!
0 votes Thank Flag Link Sun Jan 10, 2010
Hopefully two weeks before close of escrow you have already gone through all your inspections, appraisal is back and reviewed and lender advise everything is on tract. But now with all the lending changes I am seeing to keep the loan contingency in place until funding (it used to be like that years ago). If you are not confident in the REO request and cannot afford to loose your earnest money think twice about the contract.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Sun Jan 10, 2010
Hi Peggy, If the buyer is unwilling to remove all contingencies two weeks before close of escrow it is an good indicator that the buyer does not hav their loan in place and ready to fund. This lets the seller know that there are issues and if the buyer is not willing to put up their deposit then the seller may see this as "not acting in good faith" and may want to move on the the next buyer and take their chances with a new escrow.
0 votes Thank Flag Link Sun Jan 10, 2010
the bank has a decent idea that the house will either have physical problems or be unable to meet the appraisal.

If you take those contingencies out, they can make you buy an overpriced extremely defective house.

Good for them, bad for you.
0 votes Thank Flag Link Sun Jan 10, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer