2 foreclosure questions

rogar6June 25, 2012

My predicament is this: I'm supposed to close on the sale of my house in about a month. There is a foreclosure I like that needs some work but I'm willing to fix it up. I realize banks don't accept contingencies on REO's so logic would have it that I wait until I close to put in my offer. On the other hand, I'd like to get the process started sooner but not be caught with my pants down by having the process go so quickly that the bank is ready to close before my house closes.

Is this a feasible idea: Make the offer 3-4 weeks before my close, order an inspection which could take a week or so and then try to set a closing date a few days after my closing date?

My second question. Does anyone think it would be worthwhile to go to the bank that owns the REO and try to talk to someone in person who deals with them as opposed to going thru the agent hired by the bank to sell the property? I was thinking if they could see the buyer in person and see they were serious buyers and willing to give a fair offer, it might give them a "leg up." Appreciate any input.

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It would be astounding if a bank moved so quickly on a piece of REO that they'd be ready to close in less than a month. So that's an unlikely problem.

If you have a normal financing contingency (qualifies for the mortgage) and your sale falls through, then you'd probably be unable to qualify for the purchase loan, thereby tanking your REO deal.

    Bookmark   June 25, 2012 at 6:52PM
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Correct, the REO deal wouldn't happen but I wonder if the bank would come after me in some way because I signed the contract but had to renege because my sale fell through.

    Bookmark   June 25, 2012 at 7:46PM
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In order to make an offer on the REO, the seller will want to see a pre qualification letter from your lender. W/O your current home sold, can you be qualified for the two mortgages. If not, then no, there is no way to write an offer on the REO.
Speaking to the bank after it is in the MLS is not going to get you anywhere.

    Bookmark   June 26, 2012 at 7:44AM
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Thanks for all the helpful information. I suppose I'll have to wait until my place actually closes and hope the homes I like are still available.

    Bookmark   June 26, 2012 at 2:18PM
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Have you made arrangements for where you'll live in the meantime? Will the money you end up shelling out for rent put a dent in your ability to eventually buy?

Buying a foreclosure can take much, much longer than a traditional sale--seems to me my niece and nephew were several months into the process when we saw them back in Feb. They only just settled last month. Which was fine, since for them, it was an investment property--not someplace they were planning on living.

    Bookmark   June 26, 2012 at 4:39PM
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Can someone comment on this timeline for securing a foreclosed property. I assume I put in an offer, if they accept, we sign a contract with a closing date chosen by me for late July which is when my house is supposed to close. Before the contract is signed they'll want to see my pre-approval letter but after that it's just a matter of waiting? If the closing of the REO is scheduled after my house closes then it seems like there wouldn't be a problem. What am I missing?

    Bookmark   June 26, 2012 at 5:41PM
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I don't know why some foreclosures take longer than others.
I guess it has to do with whether or not you are financing.

We have bought 3 foreclosures in the past 7 years. Two took the typical 30 days, and the last one closed in 2 weeks.

All were cash purchases, no mortgages.

azzalea - Several months into the process back in February? Are you sure that wasn't a short aale and not a foreclosure?

    Bookmark   June 26, 2012 at 7:50PM
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Yeah, that definitely sounds more like a short sale. For foreclosures around here it may take them a while to decide to accept an offer (and it better be cash or don't bother), but they close quite quickly on acceptance. On the other hand a neighbor of mine has been following property in a particular development for a year now, and not a single one of the short sales that went under contract since she's been watching has closed yet. Several have been pending since last July.

    Bookmark   June 26, 2012 at 10:15PM
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