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Earnest Money Reo All Locations : Nationwide Real Estate Advice

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Tue Jan 5, 2010
Tara Steinke answered:
You are not alone in your frustration! This is a weird market we're in... yes, plain weird. At least you are realizing that it is not a buyer's market out there in most localized markets. It's not a seller's market. Its a jammed, slowed up, frustrating market with all the short sales... and due to that, most buyers want to go after the foreclosures because of the faster response.

Also, the problem with the REOs is that they most often want the STRONGEST buyer. And that doesn't mean the highest price necessarily. Many banks won't even consider FHA because of the additional guidelines and possible hang ups. Which is a shame because many buyers, like yourself, have great credit and can close. But the banks want to see solid down payments and ask for proof of those funds. First off, I would suggest a higher good faith deposit. Also, if you have the cash to put down and you just don't want to come out of pocket, have your agent provide proof of funds for say 10% down with your offer and state in the cover letter that you are willing to go conventional with 10% down if FHA doesn't fly. Lastly, with REOs, the best policy is to offer right off the bat pretty much the highest you are willing to pay for the home. Look at recently sold comparables and also the sold price to list price ratio so you can be sure you're not paying too much (and to make sure it will appraise). Banks are all different in their response to multiple offers.... sometimes they just choose one and sometimes they ask for highest and best. If your agent can try to feel out the listing agent and get any information regarding the number of offers and how strong (price wise) they are that helps also.

AND.... I tell my buyers to be patient, be tenatious and try, try not to get emotionally attached to anything. It is heartbreaking when you do get attached and your offer is not selected. I am working with a lot of buyers right now that are going through this same dilemma and let me tell you, it is just as frustrating to go through it with you. We want our clients happy and we want to find you the perfect house AND we want the experience to be fulfilling.... but its a difficult task in this market.

That's my best.... the good thing is pricing is down 30-40% in some areas out there!! So hang in there and get yourselves into a home! Good luck :)


Tara Steinke
San Diego Real Estate Specialist
Residential Sales and Appraisal
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0 votes 8 answers Share Flag
Sun Aug 16, 2009
Blake Griffith answered:
Try to keep in mind that the bank has the last word on a short sale and they certainly don't seem to follow normal protocal. Are you working with the listing agent or do you have your own agent ? ... more
0 votes 10 answers Share Flag
Thu Jun 18, 2009
Vicky Chrisner answered:
Not cool.

Is your contract fully ratified? If the contract is not fully ratified, then chances are they can do it, but your agent would have to put you in touch with an attorney to help you interpret the law relating to verbal contracts. If it is fully ratified, then read the contract specifically for language allowing that. Again, an attorney can tell you if the language in the contract is enough, as some things found in contracts are rendered void or unenforceable by state or local code. If the contract is ratified and there's no language in there allowing this action, then my guess (guess) is that you can enforce the contract. No matter which applies, you'll need an attorney on this one. ... more
0 votes 1 answer Share Flag
Wed Jun 10, 2009
David Friedman answered:
I was just answering your last question when this one came in. Foreclosures can easily have muiltiple cash offers for over asking price. This is especially true in areas where rents will cover the mortgage. It makes the area attractive to investors. They are less concerned about another 10% drop in prices, since the rent covers it, there are many homes to choose from, and loan interest rates are low. ... more
0 votes 2 answers Share Flag
Thu Sep 23, 2010
Barbara Carter answered:
When you submit an offer it should include a prequalification letter from a reputable bank. It is odd to have 15 offers refused if the seller feels that your offer is a good one, in which a good faith deposit and proof of funding is submitted.
I would suggest if you do not have a buyers agent you contact one with help in submitting an offer that will be attractive to the seller.
I wish you the best of luck finding a home that meets your needs.
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0 votes 13 answers Share Flag
Wed Jun 10, 2009
Steve Belt answered:

That's a great question, and one I've written about several times on my blog. Right now today, the average home in the Phoenix market sells for 98% of it's asking price. For a $100,000 asking price, the average home is going to sell for $98,000. Although, if you look at foreclosures, 33% of the time, the home is selling for above the asking price. Sometimes significantly above the asking price (more than 20%).

Is there a good rule of thumb? Not at a great one. If you want a home, particularly one you are going to live in, be prepared to start with your highest and best offer. The Phoenix real estate market recently did a massive about face, and is suddenly in a pretty strong seller's market. Prices are actually trending upward. Prices are still low, however, and will probably stay low for some time.

I think it's an optimistically exciting time to consider buying a home right now.
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0 votes 5 answers Share Flag
Sun Jun 7, 2009
Nick Rhea answered:
Hi Julia,

If you must have the home then proceed with the inspection, but I would not advise my clients to pay for an inspection until there is an accepted offer.

Nick Rhea, MBA, Broker
Bombora Investments Inc
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0 votes 3 answers Share Flag
Tue Jul 10, 2012
The Messerschmidt Team answered:
1. In order to view a foreclosure, you will need to schedule an appointment with a realtor. It is best to have a Buyer's Agent represent you in your home purchase, including a foreclosure, so that your best interests are being protected. What I mean by that is that a good Buyer's Agent will include contingencies in the contract such as financing, appraisal and inspection. That agent will also do a comparable market analysis for you so you can see what similar houses have sold for in the past 3-6 months. This way you will know you are getting a good value.

The attorney will do a title search as they do for all home purchases.

Buying a foreclosure has its positives and its negatives, just like any purchase. Many, if not most, foreclosures are in disrepair and will need cosmetic work, if not more. However, there are some that have been well maintained. The condition should be reflected in the price. You need to consider if you have the time, money and/or energy to complete the repairs needed to make a property a home you'll be happy living in. You will not get a seller's property disclosure like you would with a house being sold by the owner, since the bank that owns the property has never lived there.

There are addendums to the contract that will over ride some of the provisions in the standard GAR contract. They vary but typically protect the seller. The one "gotcha" that is very common is the per diem charge. This is where the buyer is charged $100 or more per day if the property does not close on time (unless it is the seller's fault). That is one reason it is good to schedule your closing 45 days from binding agreement date. That will give you plenty of time. But if you are competing with other offers, a quicker closing may be looked on more favorably by the seller.

There are some very good buys in new construction that the builder has been unable to sell. There are also motivated sellers that have to sell, due to being tranferred or having already bought another home, divorce, estate sales, etc.

I recommend you work with an experienced Buyer's Agent who will show you enough homes that you will recognize a great deal when you see one, without anyone having to tell you. Once you have seen enough homes you will easily recognize which ones are overpriced and which ones are priced to sell.
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0 votes 6 answers Share Flag
Sat Sep 26, 2009
Rebekah Owen, Broker answered:

In a perfect world, you would have final approval on the loan before you removed the contingency.
Now the loan is not an "excuse" to pull out of the transaction.

Your deposit is at risk if you do not close the transaction as agreed.

Good Luck

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0 votes 12 answers Share Flag
Tue Jun 2, 2009
Kappy Mann and Jennifer Boehm answered:
Your question is kind of ambiguous. Do you mean that the home has already been foreclosed upon and is now owned by a financial institution (bank) and listed on the market as an REO property? If this is the case then of course you may get a mortgage, sometimes even one through the bank that owns the property. They tend to give some incentives to fill out a loan application with them. If, however, you are planning to purchase a home at auction, you best have a lot of earnest money (cashier's check) with you and have made previous arrangements with the auctioneering company for your financing. These are a bit more tricky. If this is your plan, be sure to read the online information. If you are wanting to buy the place at the courthouse steps, I am pretty sure you need cash. Good Luck!! ... more
0 votes 3 answers Share Flag
Tue Oct 27, 2009
Tim Cahill answered:
Hi Peter,
I would love to venture a guess on this, but any good real estate professional will tell you the same thing: consult with an attorney. It's better to pay a 30 minute consultation fee than to take someone's bad advice and perhaps lose the house as well as your earnest money.
Good luck!
--Tim Cahill
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0 votes 6 answers Share Flag
Wed May 19, 2010
Chad Boyers answered:

I'm sorry to hear of the troubles you've encountered in this purchase. My recommendation to you is to talk to a real estate attorney. As agents, we're not allowed to interpret the legal meaning behind contracts, otherwise if we're wrong we can get into a heap of trouble.

One thing that I'm not understanding is that if the offer was originally accepted and addendum signed, why did the bank come back to you to see if you still wanted to buy it? You had already signed the purchase agreement, so I guess I would assume that you still wanted to buy the property. Strictly as a guess (and without knowing all of the details), I would think that if the bank caused the delay in closing that they shouldn't charge you the fee. If the delay was caused by you, then the fee would be assessed. Again, consult an attorney if the fee is brought up to make sure everything is correct.

Good luck to you.
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0 votes 5 answers Share Flag
Mon Jul 6, 2009
Isaac Bensussen answered:
Home Buyer

This is business as usual with REO's (Bank owned Real Estate). If you accepted the counter offer that the Bank sent you, most likely you got the deal but with Foreclosures you can never be 100% sure and they take their sweet time to get back to you. Lean on your agent ( I hope that you have one representing you) and ask him or her to call the Listing Agent for the Bank and ask what is going on. Usually, Banks take as long as a week to get back with paperwork. Good luck.

Isaac Bensussen
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0 votes 6 answers Share Flag
Tue Jun 16, 2009
Joshua Jarvis answered:

That's the way it's done. There is a period for your inspection.

You offer your best offer and go from there. Factor in hidden repairs if you think it has them.

YOU COULD INSPECT IT FIRST? but what if you take too long to make a decision and someone else buys the home, then you have to pay for another inspection. ... more
0 votes 8 answers Share Flag
Fri May 29, 2009
Deborah Madey answered:

Why do you think the agent did not send in your offer? It is common for banks to be slow to respond to submitted offers. It is highly uncommon for a bank to sign off on an offer as "rejected" for your verification. Knowing that agents often become frustrated with banks who do not respond timely, or at all.........I would guess the odds are higher that the agent did submit the offer.

However, I am only referencing the odds and do not know any details about your offer.

Since it is improbable to get any verification from the bank, my suggestion would be to ask the agent to provide you a written verification of when and how your offer was submitted. You might want that via an email correspondence, or on company letterhead. I would have not objection to providing that to a buyer.

Alternatively, if you remain distrustful of the agent, I suggest you contact the broker and explain why and see what verification the broker may be able to provide. If the agent submitted via private fax or personal email, the broker can only provide you what he/she obtains from the agent.

I suggest that you first simply ask the agent for confirmation.

Best of luck
Deborah Madey - Broker
Peninsula Realty Group - New Jersey
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0 votes 11 answers Share Flag
Tue May 19, 2009
Chris Mabry SRS,e-PRO answered:
Assuming that you are talking about the SELLER paying for your closing costs, this is always an option but limits the strength of your offer. If ou are going to be looking for a short sale or a forclosure, then don't even consider it as it will just not happen. In a "normal" sale situation, the seller would contribute to your closing costs out of the proceeds for the sale. Which is pretty much the same thing as out of pocket really. The brekdown of who pays what will be on yoour final closing statement. If the seller contributes then they just get less proceeds from the sale. And yes, asking the seller to contribute means that they will be making less money. It is the same thing as offering less on the house in the first place. Find a good local buyer's agent and they will offer advice on the specific situation at hand. ... more
0 votes 10 answers Share Flag
Wed Apr 27, 2011
Eddie Hurt answered:
Unfortunately, at this point it is mostly a waiting game. If your agent or the agent on the listing side have experience with short sales or are using a short sale service, you may see things progress more quickly. Good luck and try not to get discouraged. ... more
0 votes 24 answers Share Flag
Wed Mar 3, 2010
Jennifer Kirby answered:
A question, is this an incentive program with Burnsville, Dakota County? If you can let us know the name of the program, it will help us better answer your question. Thank you!
0 votes 3 answers Share Flag
Thu Mar 28, 2013
Terrance Cochran answered:
The short answer is YES. You can do a WOO (withdrawal of offer). In the future I do not recommend putting up a deposit for a Short Sale, instead you should try to do an increased deposit at the time of short sale approval whenever possible. As far as the time it will take to get your money back, this will vary, but you should get it back within a week (or the time it takes to mail out the check) of the seller acknowledging your cancellation. Cancellation prior to approval is very common with short sales and you should not have a problem with it. ... more
0 votes 55 answers Share Flag
Tue May 12, 2009
Bonnie Sterling answered:
I think you should contact the Department of Real Estate if you do not receive a response from the broker. Sounds like there were a lot of disclosures missed along the way but there are two sides to every story. Hopefully, the Broker will want to work things out with you but if you dont get satisfaction there, it sound like you have tried. I think the DRE is the next best place.

Good Luck and I recommend that you interview your next Realtor. Perhaps you could select a few that helped you here and meet them for coffee. Everyone is going to be nice. Even though you have had a bad experience, trust yourself to make a good pick this time. It is likely you will do a good job and even more likely that situation could not was a very unlikely one.
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0 votes 4 answers Share Flag
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