This article is an excerpt from my weekly buyer blast that I send every Friday. I have been experimenting with other days of the week but you will receive it at least once per week. I send out a List of area Foreclosed and Distressed Properties in the Statesville, Mooresville, Troutman areas of Iredell County. I also include Charlotte and Catawba on occasion. If you would like to receive my weekly article and Foreclosure listings, please SIGN UP on my website and I will add you to my list. I will not call or bother you, just provide you with helpful, useful information.
Today I am out working in the community as a site captain for Realtors Care Day 2011. Our local Realtor Organization will be working on over 20 homes from Statesville to Charlotte. Over 600 Realtors will participate and help out our fellow residents that are unable to maintain their homes. It is always a pleasure to see my fellow Realtors come together for such a good cause!
You can keep up to date on happenings in Statesville by "liking" my Fan page on Facebook. I try to post timely articles of local events, new listings, new businesses, market updates and much more.
This week I would like to talk about the negotiation process. Many first time home buyers are unsure of what happens when you finally find a home you like and want to make an offer. It used to be a much easier process before the "foreclosure" and "short sale" era (as I call it). Normally you would sit down with your buyers agent and look at area comps to find a good price to offer initially, decide on the amount of earnest money to deposit (this is your "good faith" money), set the proposed inspection and closing dates, decide if there are any other conditions you want to include, sign and present the offer to the seller along with your pre-qualification letter.
Here is a link to the basic process offered by REBAC (Real Estate Buyers Agent Council):
Negotiating Process for Buyers
Today, however, you need to know much more about presenting offers such as:
Is it a HUD house? This process is completely different and involves submitting a bid online to HUD on their paperwork and adhering to a VERY strict timeline. Your buyer’s agent will need to understand the different types of HUD home offerings, the required timelines and earnest money, any "escrow" amounts for repairs and type of finance programs.
Is it owned by Fannie Mae or Freddie Mac? These homes may offer specialized finance programs with other incentives and home warranties. They will have their own bank addendums and instructions for submitting offers to them. They prefer shorter closing times but are relatively easy to work with.
Is it a Short Sale? These homes are much more difficult to work with. The home has not foreclosed and the lender may agree to accept less than is owed on the home however, the process is painfully slow and may take 4-6 months to get an answer. Please be sure you have an experienced agent before attempting one of these! Your offer is submitted to the seller for acceptance first and then to the bank for approval, then the mortgage insurance company and then possibly Fannie Mae or Freddie Mac or HUD. If there is a second mortgage on the home, it gets even more complicated. Get an attorney upfront to do a title search and know what you are walking into.
Is it owned by another bank? All banks will have their own addendums that will need to be signed after your offer has been accepted. You need to be sure you read them thoroughly and know what you are signing. It is a good idea to have your attorney read them over before finalizing them.
Here are some links from some of my past Blogs that offer additional information:
A few things to consider before purchasing a distressed property
03-10-2011 23:58:47 PM
I have been working with lots of buyers of foreclosed or distressed homes lately and wanted to give you some hints on how to make this type of purchase a little easier. First, let’s talk about Short Sale Properties: A … Continue reading →…»
How to Purchase a HUD home in North Carolina
02-10-2011 14:23:57 PM
How to Purchase a HUD home In recent months, there was a huge backlog of HUD homes that were held up for closing in NC and changes were made to try and streamline the entire process. There are now three … Continue reading →…»
What is this new "Due Diligence" Fee in North Carolina and how does it affect me?
01-26-2011 17:16:00 PM
I know I will be explaining this question for a long time to come! As of January 1st 2010 in North Carolina, we no longer have just the Earnest Money deposit option on the Offer to Purchase Sales agreement. Our … Continue reading →…»