Thoughts on REO Offer Situation?

March 27, 2009 8:42 AM

We've been waiting a week for a response to our offer on an REO (foreclosure) property. Today we got a bank addendum..

We have an REO property that we made an offer on a short while ago. It's been on and off the market a number of times over the last 4 months, going back to an original list date of about 100 days ago.

Last Friday we made an offer, it has returned to the market for about a week prior to our offer. Ended up in a multiple offer situation.

List price was $175,000, and we wrote at $185,000 with a home inspection contingency.

The following Monday, they came back, had 5 offers on the property, we put in $193,000 as our highest and best. Now, to expand on the highest and best offer - our offer includes 20% down, conventional mortgage, not asking for any repairs or concessions, etc. Pre-approved, proof of funds, and 2% earnest money.

That was this past Monday, and last evening the bank came back to us with an "as-is" addendum. (bank is Sovereign Bank, for reference). Our Realtor was a bit confused, as he stated he has never seen this addendum to be signed prior to a verbal acceptance on an offer (we have no acceptance yet).

He indicated that he thinks it was a ploy on the banks part for another round of bidding on the property, and we did up our offer to $195,100 and the bank accepted in the new offer.

I'm trying my best to be patient with this property, but at the same time, it is draining.

Anyone know what getting the addendum / disclosure about the property being "as-is" prior to having a verbal acceptance? I know it's standard practice for those addendums to be used, but not with this sort of time-line.

Please tell me what that likely means in a 5+ offer situation on a house! Thank you!

posted by yarrr to Home & Garden (4 answers total)

The banks are dumb. I'm a Realtor in Minnesota and have have sold 3 REO's this year and I am so amazed and what goes on. You can't put any rhyme or reason to it.

Here's what probably happened:

Offer came into the bank. Julie, who usually processes them was sick that. It sat for a few days when Julie was trying to catch up. Later she finally responded that there were multiples, best and final please... Then you respond and Julie has to take the afternoon off for whatever reason. Or maybe a couple days. They tell Frank to take over Julies REO files and go through them and try to finalize anything he can so she is not so swamped when she comes back. Frank does like dealing with stuff in your state, so he sends an as-is addendum out as he thinks it should have been in the original offer, and now throws your file into another pile for Julie.

Julie comes back and is trying to catch up again, but she's not feeling so well today and it not into it. She accepts your offer via a phone call to your agent, and moves on to the next file.

Dealing with the banks is not the same as dealing with a single seller, everyone will work the file differently at the bank.
posted by thilmony at 11:01 AM on March 27, 2009

I had a similar situation last July.

AS-IS is pretty standard and would normally have been included earlier in the process. Are there any other clauses in the addendum?

I'd review it again with a more critical eye and doublecheck the reliability of your home inspector before signing anything. Were there any potential causes for concern in the inspection that could suggest more extensive damage or problems than were reported?
posted by emjay at 11:04 AM on March 27, 2009

Best answer: i am a bad previewer. i wish i could delete that above... one more time.

The banks are dumb. I'm a Realtor in Minnesota and have have sold 3 REO's this year and I am so amazed AT what goes on. You can't put any rhyme or reason to it.

Here's what probably happened:

Offer came into the bank. Julie, who usually processes them was sick that DAY. It sat for a few days when Julie was trying to catch up. Later she finally responded that there were multiples, best and final please... Then you respond and Julie has to take the afternoon off for whatever reason. Or maybe a couple days. They tell Frank to take over Julies REO files and go through them and try to finalize anything he can so she is not so swamped when she comes back. Frank DOESN'T like dealing with stuff in your state, so he sends an as-is addendum out as he thinks it should have been in the original offer, and now throws your file into another pile for Julie.

Julie comes back and is trying to catch up again, but she's not feeling so well today and IS not into it. She accepts your offer via a phone call to your agent, and moves on to the next file.

Dealing with the banks is not the same as dealing with a single seller, everyone will work the file differently at the bank.
posted by thilmony at 11:10 AM on March 27, 2009

Response by poster: I'm well aware that "as-is" clauses are standard; thats not a worry. I'm just trying to figure out why the addendum came along at this point. Typically in our local market at least, those addendums get sent along with a verbal acceptance of your offer.

Thanks for the insight so far; I'm trying to decide whether or not to drag our realtor out this weekend to look at properties while we wait to hear.
posted by yarrr at 11:12 AM on March 27, 2009