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Reo-Team
FORECLOSURE
INFORMATION
The following
information has been composed to help you and should be used
as general guidelines when trying to purchase a foreclosed
home. Many of these issues come up on a regular basis when
writing and offer, negotiating the counter offer or in the
sale of the property. After reading this information you will
understand the typical standards applied by many of the 3rd
party sellers.
PRICING
The seller
typically sets the price of the foreclosed property based on
three items:
1)
Price opinion
from the Real Estate Broker that has the listing
2)
A second
price opinion from another RE Broker or an Appraiser
3)
They look at
what they have into the property.
After
factoring these items they set a price that is competitive and
should have the property sold within 90 days. Because they
try to price the property competitively many times there will
be multiple offers on the property. At this point you will be
notified that there is more than one offer.
OFFERS
Typically the
seller requires offers to be submitted with a
prequalification letter
(financed) or
proof of
funds
(cash). Many times the seller will
not negotiate unless this is included.
Most of the
sellers have standard
addendums that address
items such as inspections, who pays what fee’s, and the
property is being sold “AS-IS”. Many of the sellers will
require these to be submitted with the offer.
In order for
your offer to be considered the seller will require earnest
money with the offer. The amount of the earnest money is
according to the price of the property. Typically a minimum
of $1000 is a good rule of thumb, but the more expensive the
property the more earnest money the seller may require.
Most sellers
will not accept an offer that is
contingent on another property
selling, unless it is
under contract at the time of the offer.
DISCLOSURES
The sellers of
foreclosed properties have never lived in the home and in most
situations have never seen the home and have no knowledge of
defects or deficiencies of the property. You do have the
right to have a home inspection, performed either personally
or by a professional. This should be made part of the offer
and conducted in a timely manner.
Redemption
rights do apply in the state of Alabama. What this basically
means is the person that was foreclosed upon has the right, up
to 1 year of foreclosure date, to redeem the property. Along
with the prior owner any secondary lien holders also have this
right. Although this rarely happens it is a possibility and
you should seek legal advise for your personal exposure
because the party wishing to redeem the property has to pay
all lawful charges including necessary repairs made to the
property.
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