Downside of REOs Part 2

I am currently working with clients buying an REO home to live in.  They are not real estate investors, so I have had to be very sure they understand the process.  The particular asset management group for this transaction used the addendums to change the inspection period from 12 days to 10, required use of the seller’s title company and closing of the seller’s choice, reduced the number of days to closing by half, put a high per diem charge for every day after their close by date, and required $2000 in certified funds as a deposit.  The buyers had already given a good faith check made out to the listing realty company as per the original contract. 

This addendum put me in the precarious position of trying to best protect my clients, without causing them to not be able to buy the home they wanted.   We did this by writing up an addendum agreeing to their addendum after the inspection period, and agreeing to exchange the original good faith check for certified funds once the inspection contingency was released.   The asset management company never signed our addendum, but they did wait for the inspections to be done before demanding the certified funds.

Because this particular home had some pretty obvious defects, we negotiated a lower price up front to cover the expected repairs.  Where we got into a bind, was that we discovered the house had a very high radon level and no sump pump.  Radon abatement was going to be costly, so we asked the asset manager for a credit at closing.  About 50% of the time they will agree to this if it is reasonable.  This particular company would not agree, so my buyer clients had to make a decision to continue with the purchase or release.  Fortunately, they felt like it was still a good buy for them and they moved on to closing.