# Forclosure Offers Question



## jmtinmi (Feb 25, 2009)

Our current rental tenants have recently placed an offer on a foreclosed home. They seem to be having second thoughts about it, and are wondering if they will loose their $1000 deposit. It seems like they are getting a steal with a 4 bedroom mobile + 25 wooded acres for about 80K.

Question: Is there usually a inspection clause with foreclosed properties? They've found lots of water in the crawl space and are rethinking the purchase. 

Thanks in advance.


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## Paulup (Apr 13, 2010)

Unless the deposit expressly says its non-refundable, they should be able to get it back if they chose not to buy the house.


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## Jenni979 (Jan 27, 2010)

Not sure about the deposit, but we have a ton of forclosures around here... They are all sold "as-is"... You can have an inspection, but you pay for it and they will not fix anything.

Perhaps they could use the inspection to haggle the price down a bit...

Sounds like a GREAT deal, though...


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## jill.costello (Aug 18, 2004)

I have an accepted offer in on a foreclosure right now, and the "As-Is" contract DOES allow for a FIFTEEN DAY inspection period; it does NOT have to be a professional inspector; If I go in there and don't like the cracked ceiling, or the roaches in the cupboards, I can get out and get my deposit back.

Now, if I go beyond the 15 days past the execution date (the date my offer was accepted), I may or may not get my deposit back, it's at the discretion of the selling bank......


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## jill.costello (Aug 18, 2004)

oh, forgot to add, I had 5 days to apply for financing, and 30 days to get approval. If I FAIL to get financing, then I can get out of the contract, also, and get back my deposit. If my financing were to be approved, and I simply did not show up at closing, then I WOULD lose my deposit.....


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## RiverPines (Dec 12, 2006)

Mobile homes are usually 'as is' to begin with.
When it comes to foreclosures and any buying of property get it in writing exactly whats circumstances will the deposit be refunded if the deal doesn't go through!!!

We bought a foreclosure but had it in writing, if the inspections on the property, well, septic and a big list of other things isnt approved by us then we get all our money back as soon as we cancel the sale.
We paid for all the inspections and that money we knew we couldnt get back because its not the inspectors fault if he/she finds something we dont like. But I wanted to make sure we knew what we were getting.

We had so much in writing for every little step of the way.
If you dont have every detail for every penny in writing, you most likely will loose the money if you dont buy.

Look also at the land value. The home can be fixed, replaced, etc. Whats the land worth?
Also mobiles have lower value than location built homes. 
Our place we bought on a land loan because the mobile on ours had no real value for a mortgage. Mobils depreciate way to fast to be security for a loan in most banks opinions these days.
Luckily our place was so cheap of a foreclosure that the land alone was worth 2 times what we paid so the loan was a shoe in. Luckily the guy thats lost this place didnt owe much to the bank so they didnt care about price. 
Get loan and instant equity to boot!


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## jmtinmi (Feb 25, 2009)

Thanks for the education. They decided to walk away and I know they are learning as they go also.


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## edcopp (Oct 9, 2004)

The legal advice that you get on this board is worth exactly what it costs, not one penny more.

That said the way to find out what a contract says is to read it, preferably before signing. If the contract does not involve you (with a signature) any advice you give may be considered legal advice. This normally the work of a lawyer.


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## tiogacounty (Oct 27, 2005)

Don't assume that a foreclosed property is automatically "as-is". I know of several recent deals where the bank was clearly offering allowances to correct obvious defects, like a wet crawl space, failed water heater or other issues.


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## Nevada (Sep 9, 2004)

jmtinmi said:


> Our current rental tenants have recently placed an offer on a foreclosed home. They seem to be having second thoughts about it, and are wondering if they will loose their $1000 deposit. It seems like they are getting a steal with a 4 bedroom mobile + 25 wooded acres for about 80K.
> 
> *Question: Is there usually a inspection clause with foreclosed properties? * They've found lots of water in the crawl space and are rethinking the purchase.
> 
> Thanks in advance.


A true foreclosure property is only available by bidding in an auction; at either a trustee sale in trust deed states, or a sheriff's sale in mortgage states. In either case, true foreclosures are only available at auction. A down payment is not normally a part of a foreclosed property auction, since full payment is normally required at the time of the winning bid.

From the little you have told us, it sounds more like you're talking about a bank REO, not a true foreclosure. In other words, the bank owns the property and is trying to sell it on the open real estate market. Once the bank owns the property the foreclosure process is complete so it is no longer considered a foreclosure property.

With bank REOs there is usually an inspection provision in the sales contract. That should be part of the offer that was made, so your tenants should be able to answer that question.


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## Nevada (Sep 9, 2004)

tiogacounty said:


> Don't assume that a foreclosed property is automatically "as-is". I know of several recent deals where the bank was clearly offering allowances to correct obvious defects, like a wet crawl space, failed water heater or other issues.


As I said, a true foreclosure property is obtained by competitive bid at auction. All sales are final at foreclosed property auctions. I suspect that we are talking about a bank REO (real estate owned) sale in this thread, which is really a standard real estate sale with a bank being the seller. I say that because of the down payment. At a foreclosed property auction the buyer settles for the entire sales price at the time the winning bid is made.

With a bank REO, the bank is trying to get top dollar for the property. If they were really trying to dump the property then they would have set the starting bid lower at the auction to let a professional investor take it off of their hands. Instead they have taken ownership of the property and are listing it with an agent.

To get top dollar they will be trying to attract normal retail buyers (as opposed to professional investors). To do that they will need to offer a sales contract with standard retail provisions.


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## edcopp (Oct 9, 2004)

The first sentence of the original post refers to a "foreclosed" (past tense) property. This would lead me to believe that the process of foreclosure has already taken place.

In this case it is often the lending bank that ends up owning the property, and some very good deals can be negotiated if you know how.

Tip: Do NOT start out with the sentence "I ain't got no money, but".


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## Nevada (Sep 9, 2004)

edcopp said:


> In this case it is often the lending bank that ends up owning the property, and some very good deals can be negotiated if you know how.


I suppose that might be, but that wasn't my experience when I was looking to buy my home last fall. Banks would list homes in the $25K to $30K range, but they would refuse to sell at those prices. I followed a few of those through the system and the banks were getting $50K to $60K for those homes.

I was able to do much better at the auction. It's not easy and it took a month of attending the auction every day, but I finally got what I wanted for the price I could afford to pay.


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## desertdreamer (Sep 30, 2004)

.....


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## ChristieAcres (Apr 11, 2009)

Here, banks are getting more for Foreclosures they hold Title on than Short Sales, even non-stressed property sales. That doesn't make sense to me.

Ed Copp had good advice in pointing out some advice can border on legal advice. I am currently a licensed WA State Real Estate Agent. What I can say here, legally? A deposit is called Earnest Money. An Offer includes "Contingencies" that condition the refund of Earnest Money. A few were mentioned. Every state will have differences in their Contracts. Here, there are provisions in the Contract for the refund of the Earnest Money. When I write up Offers for my Clients, I go over each and every Contingency. When it is for a Foreclosure Property that is "as-is," there is still an Inspection Approval contingency. Since Escrow usually holds the Earnest Money, when the Contract is cancelled due to disapproval of the Inspection, the Buyer (s) normally get their refund. If the Buyer (s) can't get Financing or there are Title issues, they normally can get a refund. Here, a Listing Broker can hold the Earnest Money in a Trust Account. I prefer Escrow holding it, as a 3rd Party.


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## txquilter (Dec 29, 2009)

The question becomes, has their offer been accepted by the lender that owns the property? If not then if they want to get out they need their real estate agent to tender a form "Withdrawal of offer" (it might be called something different in their state). In most states, a buyer has a legal right to withdraw an offer as long as the seller has not accepted the offer.

I would encourage them to talk with their real estate agent and if they didn't use one then to find a real estate attorney and consult them regarding this matter.


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