Tips for Working with Lenders When Purchasing a Foreclosure
Are you considering purchasing a home that has been foreclosed upon? If so, it is important for you to know that there are some special steps that must be taken when purchasing property under these special circumstances. After all, banks are taking on a special set of circumstances and risks when they work issue a loan for a foreclosure. Therefore, in order to get the results you are after, there are a few things you need to keep in mind when dealing with REO lenders.
Make Your Earnest Money Deposit Payable to a Title Company
While you might want to make your earnest money deposit payable to a brokerage, it is a better idea to send it to a title. When making your deposit to a brokerage, it will be deposited into a trust account and the brokerage will have to wait for the funds to clear before it can issue a check to the title company. Depending upon the lender you are working with, you may not be granted the time it takes for the funds to clear. By making the check out to the escrow company, the brokerage won’t have to deposit the funds first and the entire process can be expedited.
Make Sure the Funds are Where There Supposed to Be
Of course, if you are going to expedite the process of getting the funds to the title company, you also need to make certain the funds are in your account. The last thing you want is for the check that you wrote to bounce!
Be Prepared to Obtain a Cashier’s Check or to Wire the Funds Overnight
Depending upon the lender, you might be asked to replace your earnest money check with a cashier’s check if the deal goes through. Therefore, you need to be prepared to swap out the check for a cashier’s check if necessary. If your funds are held in out-of-state accounts, this may be difficult to do on a moments notice if you are not properly prepared. On the other hand, some escrow companies will require you to send the funds overnight to the escrow or title company.
Try to Keep Your Earnest Money Deposit Below the Small Claims Court Maximum
The unfortunate reality is that it is easy for things to go wrong with this type of transaction. Furthermore, it is far easier to settle a case in Small Claims Court whenever possible. Since there are limits on how much you can sue for in Small Claims Court, however, you should try to keep the amount of your deposit below this number so your case will qualify for being tried in Small Claims Court.
Time Your Negotiations Effectively
Things often move quickly when purchasing foreclosure properties. Furthermore, earnest money deposits are often non-refundable. Therefore, you might want to schedule your home inspection as soon as you receive verbal acceptance of your offer. Otherwise, you may not have enough time to get the inspection completed before you have to make your deposit – and the last thing you want is to make a non-refundable deposit only to find that the property is in worse shape than you originally thought.
Ryan Lynch is part of the marketing team for an Austin Real Estate Company: http://www.jimolenbush.com/
They specialize in West Austin: http://www.jimolenbush.com/west-austin.htm and Lake Travis: http://www.jimolenbush.com/laketravis.htmDistributed by http://www.ContentCrooner.com
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