Many homeowners are delighted to find an affordable home on a bank foreclosure list. They make a reasonable offer but are dismayed when the bank sends them back a counteroffer. This practice is all too common and is one that potential buyers should be aware of.
Understanding the Counteroffer
A bank’s counteroffer is similar to one from an individual buyer. The main difference is that a bank’s offer contains pages of fine print and clauses. It essentially voids the buyer’s initial offer and suggests news terms instead. Some of the main points are the price they are willing to accept for the home and if they will pay any closing fees. One of the most important items is the closing date they are imposing. Unlike individual sellers who usually come to a mutual agreement on a closing date, banks impose them. They will also charge buyers a fee if they don’t close by that date.
Banks are corporations and many have their own legal team. Buyers should read every word of an offer to ensure that the bank hasn’t completely changed the terms of the initial agreement. Many buyers look only for the price and skip the rest, which is a big mistake. Bank offers often contain terms that are not in the best benefit of the buyer. Some may restrict the type of loan a buyer can get. This may disqualify the buyer from obtaining low or no interest loans. In addition, banks may require that buyers get pre-certified with them as a way to obtain more personal information.
Items that Banks Won’t Pay For
There are some other red flags to look for when buying a home from a bank. The offer may include a number of pages that protect the bank from anything that is wrong with the house. If the home has a mold problem or a structural issue, the bank isn’t going to pay for it. In addition, many banks won’t pay to clear a home’s title. So, if the previous owner owed property taxes or homeowner association fees, there may be a lien on the house. In order to purchase it, someone must pay the money, but it won’t be the bank.
The Decision is Yours
Each buyer has to decide whether they can accept the terms of the bank’s offer. If a buyer does decide to accept it, they should have the document carefully reviewed by a qualified real estate professional first. Remember that the document is binding and can’t be undone.