The majority of foreclosure activity in Santa Barbara county centers in the Santa Maria and Lompoc markets. In a “typical” real estate transaction, the parties use forms produced by the California Association of Realtors. However, most of the time banks demand that their own contracts be used when selling foreclosures. Bank sellers have special issues they want to address in their contracts and they use their own team of lawyers to draft their contracts. Buyers are advised to seek legal advice before signing any real estate contract, but especially bank owned property contracts which are heavily weighted toward the seller. Typically, I see the following clauses in bank owned purchase contracts:
1) Limited inspection days. Buyers typically get 17 days to inspect property, unless they ask for more or offer less. Bank sellers like to shorten the amount of days a buyer has to back out due to something discovered in an inspection. I’ve seen banks shorten the time period for inspections down to no days at all, but the more typical is somewhere between 7 -10 calendar days.
2) Prevailing rates. Buyers specify the terms of their financing, and if they cannot secure financing on the terms they have specified within their loan contingency period they usually can back out of a contract without penalty. Many bank sellers amend this by requiring that buyers apply for financing at the “prevailing rates” available during the contract period. So, if rates jump 1.5 percent, buyers must still perform unless they cannot qualify for financing.
3) Investor approval. Normally, once the seller and buyer agree to terms a deal is set. However, banks insert provisions into their contracts that state that the entire agreement is subject to “investor approval.” If they change the provisions of the contract, you do have the option of backing out; however, unless the issue was substantial I doubt that most buyers would, given that the market is so competitive for bank owned properties in Santa Maria and Lompoc. I have had this occur only once where the bank offered more for repairs than required, so when the contract went for investor review the mistake was caught and the contract modified.
I specialize in helping people buy foreclosed properties here on the Central Coast. If you would like a list of bank owned properties (REOs) in the Santa Maria, Lompoc, or surrounding areas, send an email request to me at tni@mintprop.com. Or give me a buzz at (805) 878-9879 and I will set up a personalized tour of homes for you.
Tni LeBlanc, JD, M.A., e-PRO
Broker/Owner, Mint Properties
(805) 878-9879, tni@MintProp.com
www.iLoveLompoc.com
www.iLoveSantaMaria.com
www.BuySantaMariaForeclosures.com
www.SantaMariaRealEstateSearch.com
*Based on the information from the Central Coast Regional MLS. Neither the Association, the Multiple Listing Service, or Mint Properties guarantees or is in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the market. Buyers are advised to consult with their own attorney for legal advice — this blog does not offer legal advice.
