The Truth about REO’s and Repairs
First Time Buyers
October 26th, 2008
A common misconception regarding the purchase of REO or foreclosure properties is that all sales are “As-Is” and no repairs will be performed by the seller. It is true that these properties are advertised that way and generally you will be asked to sign an “As-Is Addendum” as part of the contract, but what exactly does that mean? On the face of it you would think it meant just that, no repairs. Because of this many buyers, and quite a few agents, pass on homes that might be the ideal choice. The fact is that Banks are open to performing repairs if the request is properly made and the reasoning behind the request is documented in a compelling manner.
It’s a bottom line business with banks. Most don’t care so much about the structure of the contract as much as the eventual net sales price after all costs are deducted. If that includes some repairs that are reasonable in order to close escrow many asset managers would prefer that over putting the house back on the market. How that goes often depends on the listing and selling agents willingness to work towards a positive outcome for all concerned.
Because many REO homes are put in contract well below what they will appraise it is not unheard of to make some negotiated adjustments to price that include seller repairs necessary for financing. Every situation is different and the important thing is that your agent is willing to look at creative solutions to expand your housing options.
