Monday, September 20, 2010

Bank Owned Homes - A PASSIVE approach Can Cost You

Bank Owned Homes - A PASSIVE approach Can Cost You
When a buyer purchases a Bank Owned Home, it’s common that the bank will require the buyer to sign addendum prior to accepting the buyer’s offer. One of the clauses I typically find in these addendums is in regards to passive contingency removal. What this means is that time, not a written waiver, determines if buyer removes their contingencies. For example, if a buyer submits an offer and signs the bank’s addendum, the buyer automatically agrees to remove their contingencies as of a certain date. This differs from a typical real estate transaction where the buyer must provide a written notification to the seller in order to remove contingencies. Who cares, you may ask? If a buyer finds a problem with the home during an inspection phase and fails to provide written notification to the bank by the date specified in the addendum, then that constitutes acceptance of that item. If it’s a significant issue, like a major foundation or roof issue, then the buyer can still walk away from the transaction but the bank will likely keep their deposit! Know the clauses, or have an expert Realtor know them for you.
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