So you have heard about the millions of foreclosures available...and you are thinking about investing. Here are a few things you need to know before embarking on this adventure:
1. Best Offer First:
-Always put your best foot forward! Banks do NOT accept escalation clauses and will NOT accept low bid offers. These properties are already priced under the market.
2. Bank Addenda is KING:
-Only after the bank accepts your offer will they provide you with the addenda and disclosures. Please read all addenda carefully! These bank documents override any and all buyer protections afforded to you by local real estate documents. For example, the buyer will NOT be able to sue the bank if the bank does not perform the necessary steps to sell the home, such as providing clear title.
3. Always get an Inspection:
-These properties are being sold As-Is! It is understood that the bank will not make any repairs to the property, but in rare case the bank should make repairs, they will only repair structural and/or mold issues in the home. Ask your inspector to always test the air quality and identify the sources of mold.
4. The 30-Day Rule
-On average banks revolve around the 30-day Rule when dealing with foreclosures. Every 30-days banks are requesting a price reduction. Every 30 days from contract ratification, the banks would like to sell the property. There is a misconception that purchasing a foreclosure will be as difficult as a short-sale. It is quite the opposite, the banks look at foreclosures as a liability and want to get rid of them immediately...providing the price is RIGHT!
5. Buyer pays 100% of property taxes
-So you have read that Federal law allows certain banks exemption from paying property taxes when selling properties (ie. Freddie Mac and Fannie Mae). Well, DC government does not recognize the exemption status of these banks and demand the tax bill be paid in full...in this case it is the buyer's responsibility. This is a growing trend by surrounding local county governments such as Prince Georges, Montgomery County, etc.
Call me at 301-452-4767 if you have any real estate questions!