I received an email from a customer this morning questioning the pressure they are facing as buyers on a Fannie Mae foreclosure. It’s interesting to hear a consumer’s point of view when it comes to buying a foreclosed property and it is prompting me to think a little out loud with you. I’ll try to be quiet about it – after all it is very early in the morning now. We wouldn’t want your neighbors to talk now would we?
With most transactions involving short sales and/or foreclosures, a lot of the initial process for a consumer is waiting. After an offer has been submitted, it typically takes a fair amount of time to hear back from the Bank or entity that is selling the property. It’s hard to feel too terribly excited about submitting an offer when you know that it may take weeks or even months for the seller to reply. So one of the very first necessities to buying a foreclosure or short sale is patience. Lots of patience. Buckets full of patience.
When there finally is a response to the offer it may not be what the consumer expects, wants or needs. For my current customer they had asked for Fannie Mae to make several repairs to the property and Fannie Mae is refusing. Our customer knows that we need to order an appraisal as soon as possible but they are feeling nervous about what will happen if the appraiser requires repairs to be made to the property in order for the property to meet current lending standards. If Fannie Mae refuses, we may not be able to close the transaction. And the customer is truly feeling pressured; we only have a few more weeks to complete the transaction and failure to do so by the closing date will result in fines accruing that will be passed along to the consumer. They don’t want to lose the home but they also don’t like feeling like the seller holds all the cards.
My experience so far with these sales is that the seller may agree to do repairs if they are called for by the appraiser but there is no guarantee. In some cases, homes are sold in “as is” condition and repairs cannot be done prior to closing. If the property is in rough shape, financing can be a bit tricky or in some cases, not possible. There are solutions but sometimes buying with cash is the only way to move forward.
I have no doubt the Realtor involved in our transaction will give good advice to our consumer and the sale will eventually work its way through the system. What is difficult in these situations is that the consumers do face a good amount of pressure and the system is awkward and non-responsive.
If you or someone you know is looking to purchase a foreclosure or a short sale, be sure you are working with a good Realtor and Loan Officer and that you understand the process. Set realistic expectations and be patient.