Foreclosure in 23435>Question Details

, Both Buyer and Seller in 23435

Why does the bank need me to sign their contract addendum vs. the REIN contract?

Asked by , 23435 Mon Dec 1, 2008

The bank has verbally accepted my offer but want me to sign an addendum which is their contract with everything in their favor. And supposedly this addendum will supersede my offer on anything not spefically covered. This is for a foreclosed bank owned property.

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If a foreclosure, the Bank's addendum supercedes the normal MLS (REIN) contract. This is to protect their own interests further than what the REIN contract would. In fact, it will protect theirs MORE than the buyers however, there are ways to work through it without "loosing your shirt". Your agent should be going through the addendum completely AND WITH YOU! If you are not comfortable with the terms of the bank's addendum, don't move forward. If you can negotiate a couple of points, do it! AND, MAKE sure your read every word of the contract. If you don't understand any part of it, please let your agent know (you have one, right?). An agent with experience in the sale and purchase of foreclosure listings should be able to guide you through. Finally, ALL QUESTIONS YOU HAVE ARE IMPORTANT-NONE ARE TOO SMALL OR DUMB. Ask, ASK, ASK!
0 votes Thank Flag Link Mon Dec 1, 2008
just went through the same thing, and i had to walk away. the risk was too high- i spent days researching and then saw an attorney who confirmed what i thought. the typical person does not have time to do that, and just signs the paperwork and hopes all goes well. If it doesn't, surprise! you just got a few thousand added to your costs at closing, couldn't get the loan you can afford? so what -you have to buy anyway! unbelievable! etc. etc. ......And then the banks say "well the person should have done their due diligence" after the buyer ends up in debt/foreclosure! I am so peeved, i am filing a complaint with the regulatory agency that oversees Freddie Mac. the banks can say they don't have time/$$ to comply with state law- BULL$%$#. They have lawyers on retainer- they can take the standard real estate contract for each state and edit it, and still protect themselves, AND sell the house faster at a higher price.
for your situation- if you're not getting a great deal, walk. If you are, be prepared for a surprise or two, and some stress.
1 vote Thank Flag Link Thu Apr 2, 2009
Remember that you still have rights even with the bank addendum. The bank has to comply with VA Law. For example you can still choose your own settlement company. They can not force you to use theirs. They still have to deliver HOA or Condo documents...even if the listing agent tells you otherwise. They still have to deliver you a marketbable title to the property. They have to pay off any outstanding taxes or HOA/Condo fees that have occured since they took possession.

Make sure that you agent understands how to help you read an REO addendum or speak with an attorney who can.
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1 vote Thank Flag Link Mon Dec 1, 2008
Banks do not have the same guidelines to follow
0 votes Thank Flag Link Mon Dec 6, 2010
If you don't like the terms then walk away.
0 votes Thank Flag Link Sat Jan 24, 2009
Please try to find an attorney that specializes in CLOSING foreclosed properties and is used to seeing these addendums. Each bank can be different in the type of addendum they are requiring the purchaser to sign. My clients took the addendum to their attorney and he told them NOT to sign the addendum without crossing through a few paragraphs that were not acceptable to him. The bank absolutely REFUSED to remove the paragraphs and said "THE ADDENDUM IS NON-NEGOTIABLE". How frustrating that they are the ones wanting to sell the property and should do ALL that they can to ENCOURAGE buyers who are ready, willing, and able to purchase instead of scaring them to death with these addendums. The addendum also called for a $300 extension fee if the deal was not closed on time, PLUS a $100 per diem (per day charge) for not closing on time, PLUS a $20 per day deduction of real estate commission that will be deducted from the Selling Broker's side !! Ridiculous - LET US SELL THESE FORECLOSURES AS SIMPLE AS POSSIBLE !! There are some incredible buys in our market today and I could have sold more, if the banks would just let our REGULAR REAL ESTATE CONTRACTS take care of the sale. We are all looking for solutions.
0 votes Thank Flag Link Sat Jan 24, 2009
Bank standard practice due to legal issues where they cant be sued. With all foreclosures there is drama either you play the banks way or locate a property sold direct via a seller/ listing agent.
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0 votes Thank Flag Link Mon Dec 1, 2008
Banks typically have their own attorneys draw contracts that favor their position. This paperwork generally contains numerous clauses that conflict with state forms that buyers' agents use. Areas of difference often include:

(1.) Inspection clauses that restrict a buyer's ability to perform due diligence in an efficient and timely manner. Less-than-clear instructions about utilty turn-on for inspections is a major culprit in delay.

(2.) Penalties for missing a proposed settlement date. Sometimes the bank or the bank's title company causes a date to be missed and there is reckoning with disagreement about the reason for the delay. Sometimes the penalties amount to $100/day or more.

(3.) Banks often specify the title company that will handle the transaction.

Attorney review of bank documents is advisable in all circumstances.
0 votes Thank Flag Link Mon Dec 1, 2008
All banks will have this type of addendum, it is needed as laws differ from state to state and this covers all local, state and federal disclosures needed to comnplete the sale. Unfortanately this is the way they do business and if you want to buy a bank owned home, this is what you have to sign. And yes all items are in teh banks favor so make sur you do your homework before signing.
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0 votes Thank Flag Link Mon Dec 1, 2008
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