All Forum Posts by: Johnny Debt

Ralph,

Thanks for the advice. I just got back from my lawyer and we had several problems with the contract. Most of these problems we can live with except for the financing contingency.

My lawyer doesn't like the financing contingency. The financing contingency states that once we obtain a commitment letter, and for any reason the bank decides not to go through with the financing during the closing we will lose our Earnest Money.

Is this common among REO contracts? If it is, how do you guys cope with this danger?
The bank has agreed to do the appraisal before commitment letter is issued, but what about other risk?

Any help would be greatly appreciated.

Hello,

I made an offer on a REO with 20% down and the rest is being financed. I was told that no inspection would be possible after accepted offer. My loan officer qualified me for a renovation loan to fix whatever is not in HUD minimum property standards.

The loan officer told us to bring a home depot person (because they won't charge for their inspection) to see how much work needs to be done and she would qualify me for additional renovation funds for the home. She also told us not to get an inspection because we don't have an accepted offer, it would be wasting our money if our offer was not accepted. However the listing agency specifies that no inspection is possible after accepted offer. We only estimated the cost of repairing the house, however the house has no water/electricity/heating. We plan for the worse case scenario for fixes and qualify for renovation funding from bank.

The contract was sent to our lawyer. A friend of mine told me because we don't have an accurate figure for fixing the home, the appraisal might come up short. He said that if the appraisal comes up short after formal contract is signed we are going to lose our down payment unless we can come up with all cash to purchase the home.

Is there anyway to protect myself from losing my down payment if I go through with the contract? I thought contracts were contingent upon the buyer being able to obtain financing.
I also thought in a renovation loan the bank will appraise the house as is, and appraise it after the renovations are done.
Or is my friend completely wrong about this?

Any help would be greatly appreciated.

Hello,

I recently submitted an offer on a REO through a my own agent. I submitted my offer with a 203k loan approval. I offered a bit higher than listing price and also putting 20% down. However I just browsed and found the Freddie Mac top 20 tips for making offers on REOs. Here are the things we did not do for our offer.

1) We did not put Highest and Best offer on top of our offer.
2) We did not state owner occupied. But I hope the owner bank knows that a 203k loan is only for owner occupied.
3) We did not state if we were a licensed real estate agent or not.
4) We did not state Buyer to pay $50 per diem.
5) We did not state proof of funds for purchase, however on the approval for 203k loan it states that assets have been verified.
6) We did not state that we have visited the property
7) We did not send a cover letter either.

Have we severely hampered our chances of purchasing this property? Does anyone know how long it generally takes for a response to an offer?

I am a first time home buyer looking for a better deal on properties.

Any help would be greatly appreciated.