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Yes, but at least most bank sellers will allow an inspection contingency even on As-Is properties.
I guess I am misunderstanding. Everybody can access the property to have a look. But by putting in "as is, where is" it basically means you can do anything you want to, inspection wise, but it isn't going to matter to us one bit. In other words, the condition of the house will have no bearing on the asking price, terms or conditions of sale. Certainly, any prudent buyer would make sure the floor is sound, and the roof isn't leaking, but they will base their offer solely on what the house looks like NOW, not contingent on any repairs or other factors.
There is some logic to paying for an inspection before making an offer, namely that the buyer can have some details to bring the seller to reality. Somehow I rather doubt that any lender is going to price an REO with defects in an completely unrealistic way, but who knows what is their 'plan' if they are on the wacky meds.
I agree with everything you said except this. My mom and I were looking for a foreclosure in Chicago and what seems to happen is the bank prices the house at(or slightly above) what it would fetch if it were sold by the owner then slowly reduce the price at 4-8 maybe 10k intervals until it is sold(or condemned). You would think that not knowing if the water heater, furnace, air conditioner, the plumbing, and electrical are working would be worth 10-20k off the price but banks don’t think so and instead the house sits vacant for much longer than it should. The house my mom bought sat vacant at least a year.
At 100k+ in Chicago, you might not get the best neighborhoods, but you do expect the house to be in move in condition with maybe some cosmetic items to address(i.e. Somebody’s dated or ugly interior design). Many of the houses we looked at had moderate problems that should have been addressed as a lower price. We saw homes with garages on leans, plaster falling, small leaks, missing back porches (leaving a door 6-8F off the ground to nowhere), paint spots on hardwood floors, and scorched counter tops. None of the houses had appliances. The prices did drop to an appropriate level, but only after the place sat around 5+ months.
The house she bought at 90k in area of houses that sell from 120k to 160k, had a rusty water heater from the 70ies, stolen cooper from the air conditioning unit, basement flooding (which we didn't know till after we bought and very bad rain storm hit for some reason it didn't leave a mark on the walls), some electrical code violations and some slight code violations in an addition. Still even with all this work it was a nice house, great bargain, and very much worth it esp. as she was able to get much of the work done at a bargain.
I would agree with the poster that said don't pay full price for an inspection. One of the problems with REOS is that all the utilities are off. So it is hard to check if things are working if you don't have gas, electrical, or water. However, the inspector could tell you about structural issues. If you buy, you should have insurance on the house before you turn on the utilities. There are horror stories of houses that caught fire when the utilties where turned on and the new buyer didn't know that the former owner was doing something unsafe(ln the case of my mom's house , I removed an electric heating pad wraped around a water pipe pluged into an regular outlet via extention cord pipe under an addition!)
I would also set aside some money for any surprises. She found out about the basement flooding in the middle of a major remodel of the house. Luckily she hadn't remodeled the basement yet, but that did make an unexpected dent in the budget.
I would agree with the poster that said don't pay full price for an inspection. One of the problems with REOS is that all the utilities are off. So it is hard to check if things are working if you don't have gas, electrical, or water. However, the inspector could tell you about structural issues.
Every single one of my REO purchases this year had utilities on because I WROTE IT IN THE CONTRACT. Seriously guys, have your agents write in "seller to have all utilities turned on the day of home inspection."
I have closed 10 REO offers for buyers this year. Utilities were on every single time. We did FULL inspections.
Every single one of my REO purchases this year had utilities on because I WROTE IT IN THE CONTRACT. Seriously guys, have your agents write in "seller to have all utilities turned on the day of home inspection."
I have closed 10 REO offers for buyers this year. Utilities were on every single time. We did FULL inspections.
About 1/2 the REOs here - maybe more - state upfront that utilities & de-winterizing/re-winterizing are buyer's responsibility. No deviations.
I guess I am misunderstanding. Everybody can access the property to have a look. But by putting in "as is, where is" it basically means you can do anything you want to, inspection wise, but it isn't going to matter to us one bit. In other words, the condition of the house will have no bearing on the asking price, terms or conditions of sale. Certainly, any prudent buyer would make sure the floor is sound, and the roof isn't leaking, but they will base their offer solely on what the house looks like NOW, not contingent on any repairs or other factors.
20yrsinBranson
You are correct, the banks will usually not make any repairs for As-Is properties (there are occasional exceptions), but most bank addendums around here still allow the buyer to cancel if they don't like the inspection result. The case cited by the OP is a rare exception where this bank will disallow even the inspection contingency to cancel.
Hmm, think maybe that is way these places are sitting?
Quote:
Originally Posted by Chuckity
About 1/2 the REOs here - maybe more - state upfront that utilities & de-winterizing/re-winterizing are buyer's responsibility. No deviations.
I mean for crying out loud how STUPID are these "asset managers". Back 15 years ago when foreclosures were RARE I bought single family home to use as a rental / investment and I of course had to budget for "worst case" scenario. It was worth it because I paid a bit more than LAND VALUE, and if that is the kinds of offers these mental midgets want then THAT is what is going to happen when the do not make the properties even the LEAST bit similar to a "normal retail".
Could you imagine even a VACATION home being sold with the water turned off and the SELLER adamatedly REFUSING to work with buyers to even TEST the plumbing? Of course NOT as that would be a HUGE RED FLAG that the plumbing flat out IS BROKEN and not merely turned off for seasonal reasons.
I have NO SYMPATHY for lenders that employ MORONS that expect buyers to DANCE TO THEIR TUNE! There are enough reasonable LENDERS that understand the FLOOD of REOs are hurting everyone and anything they can do to sell these places at close to retail HELPS EVERYONE.
Sellers do this in order to make sure the offer accepted has no contingencies. I think it makes perfect sense to spend $300 for a home inspection and know what I'm getting myself into rather than have a ratified contract on a house that's sold as-is. As-is means just that....you can't get out of the deal because of something you find in a home inspection..without sacrificing your EMD.
Quote:
Originally Posted by Racelady88
We just looked at a house and decided to make an offer. This house is an REO. The listing agent tells our agent that this particular seller does not accept/reject/counter offers until the buyer has completed inspections. If you submit an offer and then do inspections and the house fails you do not get your earnest money back.
Why would anyone pay for inspections if they do not have a contract? Why would anyone put down earnest money that they could not get back? Has anyone heard of this?
...As-is means just that....you can't get out of the deal because of something you find in a home inspection..without sacrificing your EMD.
Must be another one of those local things. Our standard As-Is addendum still allows the buyer to cancel due to inspection issues and get EMD back. The REO bank addendums also generally allow this.
There does not seem to be a one size fits all scenario as it relates for listings of foreclosed properties.
Some are listed at $X and as poster "chirack" observed, price reductions occur on a predictable schedule. Others are priced well below market, value right out of the gate to create excitement and a multiple bid situation. And they often do.
Utility turn on/off and dewinterizing/rewinterizing are increasingly the obligation of the buyer, as in, if you want a steal of a deal, well then, put some skin in the game.
Professional investors who get the best deals, assess the situation before they make an offer and use their assessment to determine how much to offer and back it up with the facts. They are also more likely to offer cash and a quick close.
Buyers at large seem to assume that a REO sale "should be" like a traditional sale....they make an offer......with the usual contingencies........they wait for acceptance.....they have a home inspection.......they want to renegotiate the price.......and so on.
Seems to me, buyers have a choice....they can stay in the land of
"should be" or they can adapt to "what it is".
About 1/2 the REOs here - maybe more - state upfront that utilities & de-winterizing/re-winterizing are buyer's responsibility. No deviations.
I've never seen that on any of our listings. If I was a buyer, I would still de-winterize it and get a full inspection.
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Hmm, think maybe that is way these places are sitting?
