BiggerPockets

We had just been bidding on a REO and we had supposedly come to an agreement. We had signed an original purchase agreement, but the bank hadn't signed off yet. Then we received a 5 page addendum that nullified most of our contingencies. When we refused to sign our realtor told us that the bank's addendum was common and we shouldn't try and buy an REO because the addendum was standard and every bank would insist upon the same addendum. Is this true? Is it standard for a bank to limit your contingencies to where you don't really have enough time to do an inspection and title search. And to insist upon signing away the contingencies after you've come to what you thought was a fair deal?

Which contingencies in particular did the addenda remove?

As Jon mentioned, the addenda shouldn't impact your due diligence period (though sometimes the bank will refuse to give you one in the original contract), and it certainly won't impact your ability to get clear title.

In fact, most REOs will close through the seller's closing attorney or title company, and in most cases the seller will pay for the title search and title insurance. You shouldn't have to do anything except show up at the closing table with your funds or financing...if the seller can't get clear title, that's their problem, not yours (though the deal might not close in this situation).

Are you sure? I've done several deals with Wells Fargo, and have never seen a contract that allows assignment. In fact, I don't think I've ever seen *any* REO contract that allows assignment.

Did you offer actually say, "...or assigns"? Or did you somehow not let the bank know you were doing an assignment?

Lara,

I bet this is your first REO deal. If so, then I bet your agent did not explain to you what "as-is" means in the REO listing.

REO property is sold "as-is" and "where-is", which means that you are purchasing the property in whatever condition it is in wherever it is located. The lender will not make any repairs and will not give any repair concessions should your inspector find anything needing repair.

Of course the bank will let you do an inspection at your expense, and will let you turn on utilities at your expense if needed to perform the inspection, but no matter what you find, the property is being offered for sale in its present "as-is" condition.

You are expected to take whatever repair is required into account and factor that cost into your offer to purchse.

The bank's addendum has an inspection clause that basically says all this. They won't accept an inspection contingency which gives you an opportunity to either renegotiate the price or walk if you don't like the inspection report.

And yes, the addendum is pretty standard across the industry for REOs. Most of the time, the bank has their own contract form, too, and won't accept any offers that are not on their form or don't include their addenda.