Bank owned REO and Realtor MLS listings seem to be getting even more bizarre. Subsequently, do these caveats actually get real estate agents off the hook? Should anyone really consider buying these properties anymore? More importantly, is there a better option?
According to some MLS and REO listings, it would appear as if banks are becoming increasingly greedy again. Furthermore, there are some real estate agents that believe they can ask for anything in lieu of having the media hype up tales of low inventory levels and the new rebound.
Despite the fact that real estate investing expert are fully aware of the billions of dollars in delinquent loans and pending foreclosures across the nation, it seems that some REO holders and their agents may be getting a little over confident.
This has resulted in warnings similar to the following:
“BANK OWNED PROPERTY SOLD AS IS WITHOUT REPAIR OR WARRANTY. LISTING AGENT HAS NO KNOWLEDGE OF PROPERTY HISTORY, NO DISCLOSURES OR ASSOCIATION DOCS SUPPLIED. BUYER/BUYER’S AGENT IS RESPONSIBLE FOR VERIFYING HOA FEES, IF ANY, COMMUNITY RULES, SQ FT, LOT SIZE, ROOM DIMENSIONS AND TAXES. AT CLOSING, IT IS SUBJECT TO A WEB TECH FEE AND MAY ALSO BE SUBJECT TO A BUYER’S PREMIUM. SELLER WILL NOT ALLOW WATER TO BE ACTIVATED FOR ANY REASON.”
To some, this is a glaring red flag. It suggests a horrific title nightmare, even bigger association issues, and additional fees due at closing.
There may be some logical and necessary reasons for some of these things. However, it seems like a little too much when home buyers and real estate investors are being hit with abnormally high fees for purchasing these homes – homes which appear to be inferior to much of the other inventory out there.
If this wasn’t enough already, there is the question of whether a Realtor or a bank can actually abdicate their responsibilities and ethics with a simple warning. Of course you can write whatever you like, but that doesn’t mean it will actually hold up in a court.
Those considering buying these homes should only proceed if they are mentally and financially prepared for the worst case scenarios. That means properties which need complete gut rehabs, high fees and extra cash at closing, bankrupt associations, and uninsurable or salable title.
That doesn’t mean distressed properties aren’t a gold mine with awesome nuggets to be found. But it does mean being prepared. Know what you are getting into, what the risks may be, and work to reduce them during due diligence periods.
Finally, consider other sources of property to buy. There are many other options besides REOs and the MLS today. This can include: direct marketing to distressed homeowners, short sales not listed publicly, HUD auctions, real estate wholesalers, FSBOs, developing new properties, and more.
So weigh all of your options before being pressured into buying a property you know doesn’t make sense. Do, however, keep an eye out for attractive deals others are snubbing and find ways to reduce risk and increase profits.
