With the large number of REO properties for sale, it is inevitable that you will close on at least one property this year. Agents repeatedly tell me how difficult these closings can be because of the difficult of working with an instutional seller. I have closed foreclosed homes many times and believe if you keep a few tips in mind, your process will be much smoother for your buyer!
1. Know and understand the process. With a bank seller, nothing can be turned quickly. Every amendment, contract offer, or issue goes through the representative for the seller, to the seller and up the chain of command before a response will be heard. The seller's representative will be handling hundreds of properties with buyer's agents just like you. Don't wait until the last minute for an amendment. This is the most common mistake we see in foreclosure closings. Sellers will not sign the HUD unless the HUD completely matches the contract--including amendments. Bank sellers do NOT sign amendments at the table.
2. Make sure the contract accurately reflects "the deal". Is the buyer's name styled EXACTLY like the buyer intends to take title to the property and take out his mortgage? Once the contract is done, the seller has a deed drawn and delivered to the title company. Remember, the seller is across the country from us and won't be here at closing. Those deeds are done in advance so we can close quickly. If loan documents are delivered and the names don't match...guess what? Delayed closing! If the contract is written as a cash deal, the seller does not expect a note/deed of trust to be included at closing. If the buyer decides to get financing, even private money financing, the seller will require an amendement. Don't wait until the last minute for the amendment.
3. Know the players. In most of the deals we handle, FNT is the ESCROW company only. We don't prepare the title work or sign for the seller. But every REO account is different. Know who is involved and what their role is going to be in your closing so you can prepare your client!
4. Be diligent. This is a business transaction for the seller. If it's not in writing, don't expect the seller to give it to the buyer. The seller expects the buyer will have read and understood the contract. Suggest the buyer hire an attorney to review and explain the REO addendums to him/her. Once the terms are in place, there is little negotiating room.
There are great deals out there for buyers of foreclosed properties. With a little extra planning, the closing can be as smooth as buying property from an individual seller!
Paula Hester--Escrow Admin DFW
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