I'm thinking about putting a contingency in a stripped-down purchase contract offer that would help me get around the need for getting a repair estimate done on a potential rehab on a bank-owned house listed with an REO agent. The contingency would read something like: "Offer is contingent upon a contractor's written repair estimate acceptable to buyer."
This will allow me to make offers on REO houses very soon after they get into the agent's hands. I'll take a look at the house myself and get a rough estimate of the cost of repairs. Normally, if the house meets my criteria for a good rehab, I'd then get a contractor to take a look and give me a written estimate with which I can make an informed purchase offer and take to my hard money lender. That can delay my offer by a week and time is of the essence with these REOs.
So I'm wondering if the bank will see this as a very unfavorable weasel clause, and a definite rejecton solely on those grounds. I'd probably explain the contingency in a cover letter, along with a brief explanation for the amount I am offering.
Does anyone else have other contract strategies for REOs/rehabs to get their offers in quickly and get their offers accepted?
I would put in something like -- offer subject to satisfactory inspection report-- that may fly depending on the lender. THey have the rubber stamp ready for any thing that says contingent.
Better off to get your worstcase lowball estimate in with no contingencies.
Most REO's have a standard contingency inspection period that they understand will be a part of the contract.
The addendums I just signed on an REO I am buying has a built in contingency period for inspections eventhough I made my offer with no contingencies. They do require me to get a certified inspection in order to utilize the contingency though.
A lot of lenders on the addendum that they have you sign give you an inspection period. Working with the assest manager for the lender the phrase "subject to" does not seem to get their attention like the word
"contingent". Someone somewhere must tell these people not to accept contingent offers and when they see that word it sets off their alarms.
For most of the RE world a contingent offer means that someone must sell a property to purchase this one. You have to remember the people at the lender are not in the real estate industry they are just trying to move a nonperforming asset.