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Getting a Good Deal with a Foreclosure is Harder than you Think
The typical AS IS addendum will specify that the buyer is not to rely on the seller or seller's agent regarding the condition or safety of the property being sold. This declaration of total ignorance includes all portions of the property and any improvements. It encompasses electrical, heating, sewage, plumbing, the roof, the AC, the foundation, the lot size, the appliances, the soil and even the basic geology of the land the property sits on. But take note that the exclusions aren't limited to the items listed specifically in the document. It will go on further to state that the seller and seller's agent are also not responsible for the compliance of any of the above mentioned items to City, County, State and/or Federal statutes, codes and/or ordinances. If you've never taken the time to read through a full AS IS Addendum before you should take a minute (or an hour depending on the sheer length of the document) to give one a once over. We've only brushed the tip of the iceberg here.
The AS IS addendum is for use when transferring ownership of a foreclosed home. So when you run across one of those fabulous deals on the system showing prices far below the comps because they're bank owned remember that you'll be signing an AS IS addendum as part of the deal. No matter what comes out after that fact, the purchase is final. You are responsible for anything that happens (or is discovered) after you sign.
Everyone has heard the negative stories about home purchases. Some of the stories are crazy, some are common place and others are rare, but true. You just have to remember that when it comes to purchasing a foreclosed property all of the above are covered in the AS IS addendum you sign as part of the contract. It doesn't matter how long the problem was in the making. It doesn't matter who created the problem. It doesn't matter that your inspector overlooked a $40,000 issue that needs immediate attention on move-in day. The sale stands. You signed an AS IS addendum for that foreclosed home purchase.
Maybe you are positive that the seller knew the negative situation you are just discovering about the house now that you've closed and moved in to the property. Maybe you know for a fact that it was the previous owner that did a horrible DIY job hiding termite damage that only made the state of the supporting beams more unstable. Maybe your AC man tells you that the AC was rigged to run even though it was obviously only going to work for a couple months before giving up the ghost. These hidden or "missed" issues don't change the fact that you purchased the home with the AS IS addendum making everything about it including the problems ALL yours no matter who did or didn't know about them prior to the sale.
If you find yourself leaping for joy at the thought of that fabulous deal you are getting on a foreclosure listing with a fabulously low price...rethink your stand point at least once. Foreclosed homes come with their own unique problems that all come down to two things: extra time and extra money. Industry experts even go so far as to question the pricing of foreclosed homes in comparison to the extra work they inevitably require. Foreclosed properties are typically neglected and left unoccupied and is disrepair. Low price notwithstanding...the added work typically makes up the difference in price leaving the value right there with the comparable housing in the market.
It goes without saying that foreclosed homes are generally priced lower than similar, privately owned homes and they can be a great deal, but too many recent home buyers discover too late that the cost of bringing the property up to scratch adds up quickly and leaves them without the deal they were expecting. Jonathan Baer, Montalbano Homes' Sales & Marketing Manager, concludes that buyers "...might get a good deal on a desirable property, but more often then not they won't. Instead they'll get a property that was priced just right or a bit high for the condition it was left in." Foreclosure shoppers need to be aware that foreclosed properties are often stripped of not just the extras, but with a lot of the necessities as well. Lighting fixtures, ceiling fans, appliances, cabinetry, islands, built in bookcases, railing, molding, and even flooring is often missing from foreclosed properties leaving the new owner with a substantial amount of investment required to make the house livable.
And on top of all of that...financing a foreclosed home is far more difficult than financing a privately owned property. Damon Lines, of Amerifirst Mortgage out of Mesa, AZ, said, "There are a lot of reasons why it is more difficult to get a foreclosed home financed in comparison to a privately owned or builder owned home. First is that banks are difficult to deal with. It's a blanket statement, but not many will argue with it. Second, most foreclosed homes are stripped. If the home is in poor condition the financing won't be approved. And third is the FHA 90 day seasoning period requiring previous ownership to extend at least 90 days before FHA financing (the most popular at the moment) can be approved for a new buyer."
Having all the facts in front of you makes the chances of being pleased with your purchase much more likely, but regardless of how thoroughly you examine your options, foreclosed home listings have a higher probability of dissatisfaction after the fact. And when it comes to foreclosed homes-there is no after the fact. The AS IS addendum makes sure of that.
Article Source: OrganizingWeb.net
About the Author
Preston R. John is the C.E.O. of Larry John Wright Builder Advertising and Associate Broker of Larry John Wright Real Estate, Inc. For more information visit Montalbano Homes. Montalbano Homes strives to provide new home buyers with the information they need to make the very best new home purchase. Contact Montalbano Homes for up to date information on new housing opportunities in your area.More recent articles in Hardware Category
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