I found a house that was a foreclosure and now the bank owns the property. We made an offer and they

Asked by Troy D, Belmont Central, Chicago, IL Tue Jun 24, 2008

countered back still asking full price, and added $500 more to the original $500 earnest money (which they required to even make an offer). We're not sure how good the foundation is and are worried about possible mold in the basement so we want to get an inspection but don't know if they will try and keep our earnest money if the inspection shows something bad and we decide not to go ahead and purchase it. Can they keep our $$ if we back out due to the inspection showing something bad?

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Valerie McDo…, Agent, McDonough, GA
Wed Apr 22, 2009
Dealing with foreclosures is much more difficult than buying a re-sale or new constructin home.
There certainly are some good values out there, but as Keith & Ute have indicated, the bank contracts & addenda definitely favor the banks & take precendence over anything you may have put in your offer.
Do take the time to read & re-read things & for your agent to read carefully. Check on the earnest moeny requirements carefully.
& be aware that banks operate on their own time schedule. Many do not respond in a timely fashion.

I hope you will find a house that will suit you well & will have a smooth transaction..

Valerie McDonald
Metro Brokers GMAC
0 votes
Keith Knutil…, Agent, Lincoln, IL
Wed Apr 22, 2009

I agree with Ute.

Many banks are providing their own contracts, and those contracts are written to protect primarily their interests. Most local contracts are written with both buyer and seller’s interests protected. While most REALTORS are very knowledgeable of their Association’s contracts; they could miss important items in a bank’s contract because they are unfamiliar. While most bank contracts allow for some period of inspection, you could easily miss it in the contract if you do not know to be looking for it. I also agree that it is important to have an agent working with you who is experienced in reading and understanding bank contracts or they have someone experienced that they can go to for help.

Allow your agent time to read the contract a few times before you ask them to explain it to you, Don’t be surprised if they have to discuss elements of the contract with other agents to make sure they understand them.

Your REALTOR is working with your interest in mind

Don’t sign until you understand.

Good Luck

Keith Knutilla
Coldwell Banker Devonshire Realty
303 S. Kickapoo
Lincoln, Illinois 62656
0 votes
Ute Ferdig, Agent, Newcastle, CA
Tue Jun 24, 2008
Hi Troy. What happens to your earnest money in the event of a cancellation depends on the terms of the contract. Normally, as long as you cancel before the inspection period is up, you'll get your deposit money back, but you are well advised to read the contract very carefully as bank contracts tend to be very one-sided and it's not unheard of for it to provide for a non-refundable deposit. I have even seen contracts that provide that the bank can cancel the contract up until the closing, which leaves the buyers in the unenviable position of having to spend money on inspections without knowing whether the bank will pull out at the last minute. I hope you have an agent who is experienced with contracts involving bank owned properties as they can vary greatly from the standard contract that most agents are used to. You really want to read everything with a fine-tooth comb and don't be afraid to ask questions. Good luck.
Ute Ferdig
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