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Buying a Distressed Property Sucks. . The Lender Is Not Your BFF, That’s Just The Way It Is

Feb 15

filed under: 2nd Home Buyers, Foreclosures & Short Sales, Real Estate

Falling and trustingThe process of buying a distressed property sucks. No I’m not kidding, it does. Yes we represent buyers, yes we love working with buyers, but OMG if you are going to buy a short sale or foreclosure property then you need to know up front that it ain’t going to be an easy process. These transactions are difficult.  PREPARE YOURSELF FOR ROUGH SAILING.  We cannot make that any clearer to you.

As your agent I’m going to do my best to find you a great property. We’re going to find you a property that is going to fit your criteria. That’s the easy part, after all there are currently some 17,000 plus distressed properties on the market, there are easily a half dozen that you could probably own. Let’s bypass the offer process and hypothetically say your offer is accepted.  Now here is what you need to come to grips with, no matter if you are an investor, a cash buyer, a first time home buyer, or a seasoned home buyer, you are all going to be treated equally by the wonderful lender that will be handing you the keys at the close of your escrow, that is if you make it to the close of escrow.

These lenders are not your friend. They are going to ignore you, they are going to make ridiculous demands on you, they are going to get away with things that there would not be a snowballs chance in hell they could pull off in a normal market. Due diligence to be done in seven days, are you kidding me?  Try pulling that one off when buying a property with a homeowners association. Of course you want the HOA documentation, of course you want to know the state of their reserves, who wants to be hit with special assessments six months after you own the property because their operating budget fell short.

Lenders are going to want you to sign documents that basically relieves them of two things, responsibility and accountability, oh did I say two, I meant to say three, warrantability would be the third item they want relief from. Not sure if that’s a word, but it means they are not going to warrant much of anything.

Bottom line if you want to buy a distressed property know this, you are just a number, another file on someones desk. They don’t care what you want or need to know about the property and if the property happens to be a foreclosure, to be perfectly honest, in most situations neither does their real estate agent.

Buying a distressed property is not for the faint of heart. You are going to get stressed out, pushed around, taken advantage of, lose patience, hate lenders, and yes Realtors® too, except for Howard and me. You’re going to love us for holding your hand, calming you down, protecting your interests, explaining and walking your through the process and yes on more than one occasion telling you “that’s just the way it is”.

Written by Howard Harris