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I've had my eye on a foreclosure since before it went to Sheriff's sale (NJ-judicial state). After the sale went through and the property was transferred back to the bank, I visited the property with my agent a few times and gave it a good top to bottom look over. I also talked to neighbors, did research at the county clerk's office, etc... Basically the guy was an alcoholic, his wife left him, kids had grown and moved away, and he just let the place go. It's dirty and overgrown, but the roof isn't caving in, the basement's not full of water or mold, etc...It really just needs a good cleaning, a lot of landscaping (home is on 6 acres), paint, etc... There was one bathroom that looked like he had started to tear apart for a renovation but never finished, but the house has another full bath plus a half that we could have used in the meantime while that one was renovated.
Basically, it had the potential to be very good deal for my family and I. At first they had listed the home at $365K so I waited a few months-sure enough the price dropped to $340K and we made our initial offer. We ended up making a final offer of $300K which was accepted, our earnest money deposit was cashed, and we awaited the contract. When my attorney first looked at the contract (prepared by the bank's attorney) he remarked that it was "quite ugly," - very pro seller and not at all like what one would see in a standard NJ real estate contract. He then went about changing the various clauses to reflect more standard language-nothing all that exciting. Of particular interest to us was pushing back closing two weeks because the bank had delayed signing the contract two weeks. Also, the inspection contingency clauses were quite vague, so our attorney tightened them up to ensure that if we found problems we were not willing to deal with that we could walk.
The bank's attorney responded the next day, not with a letter, but simply with a scanned copy of my attorney's letter with "NO" handwritten in the margins next to each proposed revision. I found this to be unprofessional, but that's besides the point. I even consulted with an attorney I work with who did real estate before changing careers and she was confused as to why the bank wouldn't agree to what she described as pretty standard and mundane terms.
The only thing I can think of is the fact that before my attorney sent the review letter I sent the agent an authorization form from my septic inspection company (home is not served by public sewer or water) in order for a representative of the bank to sign and authorize a hydraulic load test. The system was original to the home (45 years old) and almost certainly would have failed, which was the point, because the bank's position was simply that it was functioning when the home was vacated. I'm wondering if I should have waited to present them with the form until AFTER the contract was agreed upon. I was just trying to move things along in the interest of time, but perhaps I jumped the gun and they deliberately threw the sale so as to not subject the property to a septic inspection?
In any event, I'm going to keep a close eye on the property in the hope that it languishes on the market. We really do like the house, we just need to get it for a price that will allow us to do the necessary rehabilitation/repairs (like a new septic system) without overspending.
In my experience with foreclosures, any type of contingency is a NO with banks because you are already getting a discount because the property is distressed.
If you want the property, you'll have to play by the banks rules.
In my experience with foreclosures, any type of contingency is a NO with banks because you are already getting a discount because the property is distressed.
If you want the property, you'll have to play by the banks rules.
+1
With bank-owned, they really don't care if you buy or not - you take it on their terms & they're very one sided.
Im quite surprised your attorney doesnt know this.
In my experience with foreclosures, any type of contingency is a NO with banks because you are already getting a discount because the property is distressed.
If you want the property, you'll have to play by the banks rules.
Just bought a foreclosed property with an inspection contingency, so it isn't impossible.
I wasn't about to try and haggle over the inspection results though. It was a "walk away or accept the inspection results" type of deal. Just did it to make sure there wasn't anything huge.
OP, foreclosure contracts are typically pro-seller.
Why did you send the earnest money before having a contract? Maybe that's normal in NJ, but in my neck of the woods, that's very odd. You normally send the earnest check after both of you have signed the contract.
First, this is not what can be said to "blew up". The bank rejected the amended contract. Not uncommon at all for bank-owned parcels. In fact it happens so often that I would suggest that is a big reason that many bank owned parcels are sold in "pools" to speculators that are often concerned with only one or two out of half a dozen properties -- they'll fix up those that are nice enough to flip and the rest they'll often just sell to developers or agricultural users.
Second, if you are serious about this particular home and you can afford to buy with a busted septic system that is one thing but if you are pretty sure the septic system will fail the test and you cannot afford to fix / finance without it then you probably should just put this off your radar because banks REALLY hate fixing anything and are notorious for just bulldozing houses with things like bad plumbing...
If you can afford to move forward regardless of the septic system you might want to have an actual sit-down not with the attorney that represents the bank but whatever "VP" is in charge of disposing of this "distressed asset". The smart investors / developers that buy pools of foreclosures often have "business meetings" with such guys that are at some nice golf course or private business club, I would NOT recommend such a setting, just meet at his office or a neutral office site, but you should make clear that if you can buy this place the VP won't have this thing sitting on his balance sheet and you and your family will have a home that suites your needs. Makes sense to appeal to the banker's human side...
Your attorney must not deal with banks very often. They won't sell you the home unless you agree to the terms of their contract. There is no "balanced and fair" contract with the banks.
You said your offer to purchase was accepted. Should have left it at that. Once your attorney tried to change the terms more in your favor the bank said "forget about it".
So what you need to do in the future is make sure the price and terms are something that you can live with or move on.
Banks do not change the written verbiage in their contracts. Most have an inspection period and will either fix the found deficiencies or let you out of the contract during that period, if they aren't willing to fix it.
I just bought six (6) properties in the Savannah area out of foreclosure. OP, you need to "humble" yourself. You want to buy the property, you do it their way or the hiway. Plain and simple. "wait to see it... blah , blah," you are not a serious buyer or investor. You are a spectator...about to lose the deal my friend.
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