Loyde F. Johnson

A foreclosure is somewhat similar to a 'normal' sale by owner, in that it is owned directly by the Bank or Mortgage company. However, it does bring exceptions that are not normally found in other sales. REO, (Real Estate Owned), properties may require the use of special purchase agreement forms, non-binding loan approval applications from their recoqnized institution, the Bank's own "Offer Worksheet" submittal -(usually done by the Listing Broker), and possibly an Offer Procedure statement signed by the Buyer, outling how the Offer will be handled. In addition, cash offers must be accompanied by proof of funds in addition to any sizable cash amount used for the transaction. Normally Banks do not accept Promissory Notes, Letters of Intent, or Offers Contingent upon the sale of another property. Typically, the transaction is handled via Email, and the Buyer's Agent will receive 'verbal approval', without signatures on the worksheet or Purchase Contract. REO's dictate which Title Company is to be used and allow a short time span for the Buyer to do any inspections. Remember, the property is foreclosed. The REO company has to have the utility companies turn on electricity/gas and water for a short amount of time. Also, the property is being purchased "AS IS". Most REO institutions do not allow for repairs, but, they will authorize around 3% credit to the Buyer at the close of Escrow for non-recurring closing costs. The REO companies also like a short closing time frame, typically not over 30 days. In most cases the Listing Agent has no idea of how long the Institution will take to respond to offers. Two, three, or four weeks is very common. All in all, if you are working with a professional Realtor they will guide you through the process and provide you the information and options for you to be successful in your Real Estate goals. - Tue Sep 30 2008, 17:43