| One of the most effective methods of helping | | | | sign off that they understand they will be buying a |
| homeowners save their homes from foreclosure is | | | | house that may be damaged and they agree to hold |
| becoming a local real estate investor. Starting with just | | | | the owner corporation harmless for anything wrong |
| one or two properties previously owned by friends, | | | | with the house. Besides the normal sales contract, the |
| family members, coworkers, or acquaintances, new | | | | addenda will have these disclosures that the house is |
| investors can help encourage communities to work | | | | a corporate-owned foreclosure property that has not |
| together to help alleviate the damaging results of high | | | | been maintained since it was foreclosed and may be |
| foreclosure rates. | | | | in a depreciated condition. They may as well be called |
| The process of buying a bank-owned property or one | | | | "buyer really beware" disclosures, as this is the |
| that had been purchased by a corporation at a county | | | | message they intend to convey. |
| auction can be a bit different from a regular, | | | | Due to the condition, conventional rehab loans or cash |
| arms-length purchase. Because foreclosed properties | | | | only |
| are usually not rehabilitated or maintained by their new | | | | By using this clause in a listing, the owner indicates it |
| corporate owners, potential buyers will have to deal | | | | does not expect any buyer to qualify for a regular |
| with more complicated disclosures and contract | | | | home loan to make the purchase. This is because |
| addenda that are designed to protect the bank from | | | | many banks will not lend on a house in poor condition |
| future litigation. | | | | with city code violations and lots of damage to the |
| Even in the property listings themselves, the language | | | | structure. This does not preclude buying the house, of |
| can be quite confusing to the average home buyer. | | | | course, as individuals can get a rehab loan for such |
| The following are a few of the potential clauses that | | | | purchases, which the owner will accept. Otherwise, |
| may tend to throw off the new investor. Most can be | | | | they have to pay cash for the house. "Conventional" in |
| easily overcome, though, as they are mainly designed | | | | this context generally means from a regular bank or |
| to protect the owner of the property from wasting | | | | mortgage company -- no subprime loans, hard money |
| time or having to deal with the damage done to a | | | | loans, owner-financing, creative financing, or anything |
| foreclosed home by previous owners of through | | | | other than just a loan from a bank. |
| general disrepair. | | | | Pre-qual and/or proof of funds must accompany |
| Corporate owned | | | | offers |
| This means that the bank most likely owns the home | | | | When the potential buyers submit their offer to |
| now that it has been foreclosed, or another investment | | | | purchase the property, they must include a |
| corporation bought it at the auction. It is not owned by | | | | pre-qualification letter from a mortgage company |
| a private individual, in any case. Even if the original | | | | stating how much money they are approved to |
| owners are still occupying the house, they will more | | | | borrow. The owner does not want people submitting |
| than likely be evicted soon enough, as their ownership | | | | offers for a house when they are not even |
| interest in the house has been extinguished. The bank | | | | pre-qualified for a loan to complete the purchase. It is a |
| that foreclosed on the house or a third-party | | | | tremendous waste of time, obviously, to deal with |
| corporation bought it at the county sheriff sale and is | | | | individuals who will not qualify for a mortgage. In the |
| now listing it for sale on the open market. | | | | case of a cash offer, the buyers will have to submit |
| Sold as-is | | | | proof of funds, like a bank statement showing they |
| This is possibly the most self-explanatory clause, but | | | | have the cash and are able to pay the purchase price. |
| potential buyers should be aware of all the implications | | | | These are just a few of the more commonly-used |
| of such a simple-sounding phrase. The owner is not | | | | clauses when banks list foreclosed properties on the |
| going to do any repairs to the house before it is sold, | | | | market. Most of them are designed to protect their |
| so the buyers better do have their own inspection | | | | own interests and avoid any lawsuits in the future |
| conducted by a competent inspector. It is safe to | | | | based on the condition of the house, as well as to |
| assume that, in any foreclosure house, some things | | | | prevent from wasting time considering bogus offers. |
| are probably wrong with it, even if it has not been | | | | Although most real estate investors may be familiar |
| vandalized or stripped. The owner is just selling | | | | with such clauses, new investors with excess financial |
| whatever is still sitting on that lot, whether it is a house | | | | resources may enter the foreclosure market in order |
| in great condition or falling apart with damage on the | | | | to help their communities avoid some of the worst |
| inside and numerous necessary repairs. | | | | consequences of neighborhoods turning into ghost |
| Disclosures-addendums required | | | | towns. This can help create safer cities, as well as |
| This clause means that the new buyers will have to | | | | raise the general level of wealth in the area. |