Yes, it's sad but true; we have foreclosures in Wilmington. Of course, the flip side of the negative impact of foreclosures on our economy is the incredible opportunity for everyone who can handle the process. Buying a foreclosure is not for the weak at heart and very similar to riding a roller coaster; exhilarating, fast paced, and screaming all the way to the closing! And just like going on a roller coaster ride for the first time, you really do need a qualified hand holder - I mean broker.
After working for one of the largest real estate foreclosure companies in the Cape Fear region, I feel comfortable in my proclamation as an experienced broker in this market. Many buyers will call you and say “I want to get a smoking deal on a foreclosure”. The first thing I tell them is to search Wilmington NC foreclosures on our website of course. Then I tell them to “Strap on your spurs”. In other words, giddy-up and go. There is an easy way to guide your buyer through the foreclosure process and there's a hard way. Naturally, I'm taking the easy road which is full disclosure of the process before I even show them a property. Let's get started:
1. Before you take a foreclosure buyer anywhere, get a Buyer's Agency Agreement in place- you must submit this with the offer.
2. Confirm with your buyer whether they are first time buyers, owner occupants or investors. Makes a difference with many properties who restrict the first ten to fourteen days to owner occupancy only. Typically, you cannot even submit your offer for an investor in this initial listing period.
3. Confirm with your buyers if they are paying cash or getting a loan. If cash buyers, they must have Proof of Funds letter on official bank letterhead; if procuring a loan, a Pre-Approval Letter-not a Pre-Qualification letter. Yes, there is a difference."
4. Okay, you're ready to take them to the first listing. Obtain a list of properties to show them and read the listing comments for condition of property. Many times foreclosures are not in the best of shape. And it's not always because the owners were vindictive or angry, sometimes they simply ran out of money and stopped maintaining the property. Your buyers need to know that you buy a foreclosure AS IS, WHERE IS. Typically, the lender will make no repairs.( I always have an inspection so the buyer knows what he's getting into.)
5. Once you've found the property, download the entire package from the listing. This will include all the normal disclosures and a Multi-Offer form, a lender's purchase agreement, and instructions on how to complete the package. The lender's purchase agreement is different from the NCOTP since it will have quite a bit of paragraphs crossed through. Your buyer must read the form and initial to show he is aware of all the seller's disclosures regarding the condition of the property. Tell your buyer that the lender bought the property on the courthouse steps without any property disclosures. The lender's purchase agreement will be regenerated as a clean copy and the buyer will be required to sign their agreement. The lender agreement is basically a CYA and you have no say so in the wording and you cannot add any additional comments.
6. Counseling your buyer in his offer is the most important step of the process. Remind them that the list price is already a heavily discounted price-do a CMA of the area and use that as your guide. If it is in a Multi-Offer situation, you will probably have to encourage your buyer to offer more than the list price if they really want the property-particularly when the CMA indicates this is a “smoking deal”. Trust me, you're not the only one who wants a great deal and a lot of agents only sell foreclosures. They have been watching the property a long time for their investor buyers. Make sure your buyer puts down a healthy earnest money check-this can make a difference when everything in the other offers are equal. He will get it back if he doesn't get the deal. Complete all the paperwork, scan and email it to the listing agent. Most of the foreclosure companies in this area do not accept FAX copies. You will receive a response anywhere from three days or three weeks.
7. There's no point calling or harassing the listing company in foreclosure properties-they will not respond! This part of the process can be maddening you simply have to wait.
8. If your buyer is the lucky winner, you will get an email or call that the bank has accepted your offer! Now, you are off to the races-immediately order termite and property inspection based on a verbal acceptance. Your due diligence period is short and this can get you a few extra days. WATCH YOUR DATES! If your buyer is a go, you're fine; if he get's cold feet, terminate the offer in the due diligence period. FAST AND FURIOUS!