Foreclosure in Cambridge>Question Details

Lynne, Home Buyer in Massachusetts

I am about to purchase a foreclosre that looks in great shape. they want me to sign before having an

Asked by Lynne, Massachusetts Thu Jan 29, 2009

inspection and my lawyer says that I can have the inspection but the languate in the P&S does not state that I can get out if anything is wrong. This house has been completely redone and evyerthing looks new (contractor was there when I looked at it) Is it okay to sign the p&S in MA...Is there a way out of it after if there is somethign wrong?Seller says verbally yes, lawyer says no.

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First, I'm not a lawyer, so your mileage will vary.

Are you sure you're working with the right attorney (a knowledgeable one who practices real-estate law)? If there's neither an inspection nor appraisal clause in your P&S, and if you want them in your agreement, then you should ask your attorney to add an addendum to that contract with both clauses. And then get the seller to sign the amended contract.

Frankly, I'm shocked your attorney didn't think to do that already.
1 vote Thank Flag Link Thu Jan 29, 2009
Foreclosure and REO properties are usually (as in most often, next to always) sold "as is." Meaning that even if you find something wrong, they (the seller) are not going to adjust the price or cure the issue.

I would recommend you get your inspection as your own expense before you sign if you are concerned about there might be a serious problem.

HOWEVER, and this is the real DEAL -- You should be saving a good deal of money on buying this foreclosure property. If you don't feel that you are getting a good deal; you don't really like the house; you don't like the location; or there's something telling you that you should not close, then now is the time to get out of the deal.

Listen to your "gut" and your lawyer.

Best of Luck!
0 votes Thank Flag Link Sun Feb 8, 2009
Any decent, knowledgeable attorney, who is worth his/her salt, will tell you that every offer/counter/contract represents a negotiation. And s/he will also tell you that you should always start the negotiation with a contract/offer written with a slant heavily in your favor. Banks supply contracts or counter with addenda with boiler-plate language that's written with a slant heavily in their favor, because that's what their lawyers are supposed to do. Most buyers blindly accept the terms of that verbiage, because they don't know any better (and they're not working with an attorney).
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Very true, however, the buyer had better do their due diligence before they get to that stage, because if they don't sign that addendum, the bank is going to move on to the next guy. We have had attorneys who have no foreclosure experience think they can bully the bank's attorney into changing the working or whatever, just like they usually bully the attorney on the other side and it doesn't work.
0 votes Thank Flag Link Sun Feb 8, 2009
The site below may provide answers to your questions on short sales, foreclosures, and bank owned homes. Good luck.
0 votes Thank Flag Link Sat Feb 7, 2009
The Hagley G…, Real Estate Pro in Pleasanton, CA
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As an investor, I've written several offers in multiple areas specifically on REOs with inspection, appraisal, and other contingencies. Some banks rejected my inspection contingency in certain areas, and the same bank accepted them in other areas--because they had to (ie it was a state law requirement).

Any decent, knowledgeable attorney, who is worth his/her salt, will tell you that every offer/counter/contract represents a negotiation. And s/he will also tell you that you should always start the negotiation with a contract/offer written with a slant heavily in your favor. Banks supply contracts or counter with addenda with boiler-plate language that's written with a slant heavily in their favor, because that's what their lawyers are supposed to do. Most buyers blindly accept the terms of that verbiage, because they don't know any better (and they're not working with an attorney).

Keep in mind that every negotiation is a chess match, and think of each offer/counter as a round. The initiator (usually--but not always--the buyer) should start with an offer written heavily in your favor (as stated above), and should expect the recipient to counter with an addendum written heavily in the recipient's favor (if the recipient is willing to entertain that offer). Just as every chess move should advance one's agenda, so should every counter. Stated another way, every time you give a little (on your price or terms) you should expect to get something back.

Hence, this is why the banks (and you should also) start with "asking for the world". They already know what they want and what they're willing to give up, before they begin to negotiate. And they expect for you to be similarly prepared; most buyers are only concerned with the price. Stated another way, I submit my offers for REOs with an inspection contingency already knowing in advanced that many banks probably will reject it, because I can counter their offer asking for something else that I really want (like a price reduction, seller pays closing costs, etc). FYI, the banks are playing the same game, but most buyers don't even realize that there is a game (and that they're already in it). By the way, I'm NEVER asked give up my appraisal contingency, because I only ask that the property at least appraise for the ultimate purchase price. Besides, a good lawyer will help you to bury 1 or more contingencies in your offer/addendum that will protect your interests at least as well as--often better than--any inspection clause.

It's nothing personal; it's strictly business. Again, keep in mind the banks are playing the same game, and so should you.
0 votes Thank Flag Link Sun Feb 1, 2009
Lynne,

Read the financing portion of the contract and have your attorney look as well.

First - You can do a couple things - Get a PRE-Inspection, then decide whether to sign. You can probably get an inspector out within a day.

If you are getting financing and find issues with the home, you should address them in the inspection response, then your lender should receive a copy. If the lender does, they can refuse to loan on the home and you would be able to get out based on Financing. Make sure financing is a contingency.

Next - The lender Appraisal may catch issues that prevent them from funding on the loan unless they are repaired by close. That is assuming you are getting financing? At that point, it would be a financing issue.

Check with your attorney.

Hope that helps!
0 votes Thank Flag Link Fri Jan 30, 2009
Lynne,
You can absolutely write into the offer to purchase that you will be doing a home inspection "for informational purposes only".
You must specify that you will be doing so within a short amount of time I typically write 5 days into the contract.
Also keep in mind though all foreclosures are sold as is it does not necessarily mean they will not renegotiate terms post inspection.
You need to communicate your concerns to your agent and be as clear as possible.
If you have further concerns after doing so you should speak to your attorney again.
Best of luck!
0 votes Thank Flag Link Fri Jan 30, 2009
Submitting an offer is fruitless. Most banks won't sign an offer and go right to P&S. Obviously contact a real estate attorney, but no bank will sign a P&S with a home inspection contingency. Have it first, then move confidently forward.
0 votes Thank Flag Link Fri Jan 30, 2009
Lynne,

Go with your attorney's advice....it's what you pay them for. Signing without and escape clause and no inspection is risky business. Ask your attorney about submitting an offer with an addendum that would provide you the ability to "walk" if the inspection revealed major problems.

Good luck
0 votes Thank Flag Link Fri Jan 30, 2009
Lynne,

If the seller says "yes" and isn't willing to put it in writing, go with your attorney and decide your risk willingness. Completely re-done doesn't mean completely re-done correctly! My recommendation - if you really want to pursue foreclosures, is to find a knowledgeable person, or an inspector who will come with you to a second showing before you make an offer - to determine your risk. You should assume that if the property is in foreclosure or already bank owned, repairs were probably not done with a long term implication considered. If you are shopping at the top of your price range - beware. You should always have enough cushion to cover the "as is" issues that may arise.
Julie Duncan
0 votes Thank Flag Link Fri Jan 30, 2009
adding to my previous response - I don't think it's a big deal to have a home inspection on foreclosure, you should just act swiftly. Furthermore, you shouldn't expect to have your P&S contingent upon it. A bank wants a clean, simple P&S.
0 votes Thank Flag Link Thu Jan 29, 2009
Hi Lynne, I agree with William. You should not be making an offer on a bank owned property if you are worried about the results of a home inspection. I've sold a lot of bank owned properties and have never had a buyer do a home inspection on one of them. Those purchase and sale agreements are skewed tremendously in favor of the seller.
Web Reference: http://www.BowenBoston.com
0 votes Thank Flag Link Thu Jan 29, 2009
Alright, here's the scoop Lynne- I am not an attorney, but I have played one on TV. Kidding. Seriously, I'm a top producing agent in the Jamaica Plain neighborhood of Boston. I have done many foreclosure deals recently and this scenario is very familiar to me.

1. You should be working with a Realtor. A good one.
2. You should be working with a real estate attorney. Someone who does a lot of this type of transaction.
3. Foreclosures are sold as-is.

You have a right to get a home inspection. However, it will be for your own peace of mind. As-is means as-is. Your contractor, if he or she is worth their salt should be sufficient to provide you with a sense of condition. If you're not satisfied - put the breaks on, and request a formal home inspection before you sign the P&S. Then act accordingly. No bank will sign a P&S with an inspection contingency in it.

Once you have signed a standard P&S, there's no backing out save for your mortgage contingency. This allows your to get your deposit back if after due diligence you can't obtain a mortgage commitment.

Presumably, you're getting a good deal. That's why people pursue foreclosures, but if you don't have the stomach - you should probably stick with the regular market rate homes.
0 votes Thank Flag Link Thu Jan 29, 2009
I am not a real estate agent in Massachusetts so take the advice of your lawyer. In Alabama a foreclosed property is usually sold "as is" and whoever foreclosed on it will not be making repairs if your home inspection finds items that need to be fixed.
Hope this helps
0 votes Thank Flag Link Thu Jan 29, 2009
Lynne,
You should have a Realtor represent you. Your Realtor will work in your best interest. In Texas, we have an "option period" that gives the buyer the unrestricted right to back out of the deal and get their earnest money back. If you are having to use the bank or mortgage company's contract form there still should be a place to document that you are wanting 10-15 days to inspect and back out should there be something wrong with the home that will cost you a lot of money (foundation, roof, etc.). On foreclosed properties, the banks will not repair anything, but they will usually negotiate price. One more note of caution....Be sure to get everything in writing. If it is not documented, you cannot prove someone agreed to it.
0 votes Thank Flag Link Thu Jan 29, 2009
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