When purchasing foreclosed property, there are additional things to keep in mind as you go through the closing process. Most often times, the Seller of the foreclosed property is either the lender that foreclosed on the previous owner, or a government agency, such as Fannie Mae. When these lenders or Fannie Mae enter into a Contract to sell the property, they will sell the property “As Is.” They typically do not pay for any inspections, such as the termite inspections, or any repairs needed as a result of those inspections. Therefore, when deciding to buy a foreclosed property, you should inspect the property carefully yourself so that you are not caught off guard by repairs that may be needed. Additionally, your lender may require those repairs to be completed before closing on your loan. Therefore, you will want to plan accordingly regarding funds and time. These Sellers do not like to give extensions and often times, will not. You would not want to go through the time and expense of preparing foreclosures only to then lose the property due to timing of inspections and/or repairs.
Another thing to keep in mind when purchasing one of the many foreclosures is that the Seller will have very strict closing guidelines. For example, they will require the final Settlement Statement be submitted for their approval 3-5 days before closing and, once approved, it cannot be changed without closing being delayed or rescheduled. It is imperative that all inspections and repairs have been completed, all invoices have been submitted to your attorney, and your lender has given final loan approval and submitted loan documents to your attorney, so that the attorney can move forward.
Additionally, and perhaps most importantly, these Sellers generally require that the Deed be recorded on the same day as closing and that their proceeds be wired to them. For this to happen, you will want to make arrangements to close as early in the morning as possible. This is crucial because after you complete signing at your attorney’s office, they will then have several Lender and/or Seller conditions that must be met before the Deed and Mortgage can be recorded. This process can take a couple of hours to complete and thereafter the loan funds will be wired into the attorney’s trust account. After all conditions have been met, all final authorizations received, and all funds wired into the attorney’s trust account, the closing attorney will then have the title updated, the Deed and Mortgage recorded, and disburse all funds on your behalf to the Seller and other parties whose invoices were listed on the settlement statement.