Thursday, January 22, 2009

Bank REO Purchase Addendum - Watch Out!!!

After a buyer makes an offer on a bank owned property, the counter offer addendum that comes from the bank or from the asset manager/servicer is interesting, for lack of a more nasty word! Little clauses such as: attorney fees for the bank to be paid by buyer if buyer loses their dispute, buyer's attorney fees to be borne by buyer if buyer wins! Evil, evil, evil. If buyer defaults on the purchase agreement, then the bank keeps the deposit without needing buyer to approve release of deposit from escrow (I hear retired Realtors turning over in their graves at that one - also to be known that Realtors never retire, they just sell underground dwelling into eternity). OK, yes, you can hear in my words that I am a bit upset at these addendum and the rough-shod take-it-or-leave-it attitude of the banks disposing of their inventory. My current buyer loses his job during escrow and the bank (to remain un-named - let's just say they are now owned by Chase...) decides to keep the family's $5,250 deposit. Nice, very nice...


Harriet Pecot said...

Hi Mario,

Thanks for your honesty. I have some clients who wanted to check out an auction so I went with them even though there was little in it for me financially but a lot in client relationships of course. Have you looked at the auction contract and terms & conditions? Just the kind of one sided unfairness you are talking about with REO contracts which I thought was long gone from real estate. Really, are we back to "Buyer Beware"?

Harriet (feel free to check out my auction article on - after all you did get me started on all this)

Mario Pinedo, CCIM said...

Your blog: is great.
I haven't seen an auction purchase contract yet - although I bet they are as one-sided as the REO contract addendum. It's easy for the banks and the auction companies to present this take-it-or-leave-it offering when there are so many buyers rushing to these "supposed deals". It's good to have an agent such as yourself guiding your clients to take advantage of this market without taking on too much risk. Happy blogging!