Foreclosures Not Closing
I’ve written before about the Foreclosure vs. Short Sale battle, and that I will always recommend my buyers to go after a bank-owned property rather than a short sale property. The simple reason for this is time spent waiting for the sale to be accepted, approved, and closed.
Well, lately I’ve had First Time Buyer Clients buying bank-owned properties where the closing is delayed for 2-3 weeks from the original date stated in the contract.
Unfortunately as a buyer in this position, there is little action you can take. Usually the bank has a section of the signed contract that states the only remedy the buyer has for a delay or non-performance of the selling bank is to back out of the deal and get their earnest money in return.
So, after waiting weeks and jumping through hoops in order to get a loan – setting up utilities in their name – making moving plans – and getting ready to buy new furniture, the only remedy is to back out and start over? Doesn’t sound like a very good option.
Sometimes these delays are due to the title company not having their information in place far enough ahead of closing. Other times it’s the bank not communicating quickly enough because they are so swamped with files and work, especially with continued layoffs and more bank-owned properties being sold this year.
My advice to buyers in this position, or if you’re getting ready to close soon on an REO house:
Be Patient.
There’s probably a 95% chance that things will end just fine, but you have to be patient with these banks. They are huge corporate machines and don’t care that you made plans to have a big party the week after moving in, or have a huge garden you want to get planted soon. In fact, sometimes it seems like they don’t even want to sell the home, and I’d say that’s not a totally untrue statement.
Again, just wait calmly and keep asking your Realtor questions to make sure there aren’t going to be any expensive surprises. As long as you are patient and allow things to play out you will likely get to move in and get a great deal on a house.
Other tips for closing on a bank-owned home:
- Know what Closing Costs will be charged before settlement
- Wait to schedule utility or other appointments until after you close
- Don’t plan to close and move the same week/weekend
- Schedule Closing for 2-3 weeks before your Lease expires
- Ask your Realtor for weekly updates leading up to closing
- Check with the city and water company for late bills and fees
More than anything just be flexible. If your agent has dealt with a bank-owned property before they can help prepare you for the challenges that you may encounter.
If there is a delay, DON’T PANIC! The worst thing you could do is to worry and think of backing out of the deal. You wanted the house, prepared for the date, and may have to wait a little longer for it to actually happen. Big deal.
Remember the great deal you’re getting on your house compared to prices and interest rates of a few years back. Smile knowing you are setting yourself up for a solid future of home-ownership.
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