Lately, our friends at Ticor Title have been sending tips to the Realtor community to assist agents in navigating the REO waters. Ticor refers to these informative emails as “Tips of the Week”. I’ve been collecting them and thought I’d share them with our readers. If you are interested in purchasing a bank-owned property I think you’ll find these tips very useful.
Though I’ve included all the tips received thus far, I’m beginning with Tip #3 because it shows a very good flow chart of the foreclosure process.
Ticor Tip #3 – 4/15/2009
*This interpretation by Ticor Title is based on Nevada Foreclosure Laws (NRS 107.080-107.100) and is deemed reliable but not guaranteed.
Ticor Tip #1 – 4/1/2009
What Should You Do Before You Put An Offer In On A REO or Bank Owned Property?
Before you put an offer in on a bank owned property, you should first call a title company and see if the Trustee’s Deed has been recorded. A Trustee’s Deed must be recorded to show the Bank having ownership of the property. If this deed has not been recorded it can sometimes delay closing on an REO transaction.
Ticor Tip #2 – 4/8/2009
On an REO transaction make sure you thoroughly read the Addendum/Counter from the bank!
Read the addendum from the bank thoroughly. Some important items to verify are which parties are responsible for specific closing costs and to verify the closing date. The bank may not be aware of our customary closing costs in our area. On most REO transactions, if you put a closing date for April 30th, the bank will most likely counter the date to close May 15th. The reason for this is that they need time to process the transaction. If you and your client wish to close early, please be aware that this may not be possible. It depends on the Bank (Asset Manager) and if they are ready to close. Remember we are dealing with an entity, who may be processing numerous closings at one time, not a regular seller who is anxious to close. Make sure your lender reads the counter addendum and does not lock the loan with out consulting with the escrow officer handling the transaction.
Ticor Tip #4 – 4/14/2009
Why are REO transactions being handled by out of area escrow/title companies?
When a bank takes possession of a foreclosed property they may have an asset management company handle their transactions. Many banks along with the asset management company have contractual agreements with specific escrow/title insurance companies on a national level.
To better handle the inordinate volume of foreclosures, the bank/asset managers prefer to have one company and one point of contact for the state or county. This may result in an escrow, for a local property, to be handled by an agent located in a different state or county.
billddrummer
Another thing that bears watching is what the bank establishes as its ‘minimum bid.’ The Notice of Default will show the amount owed that must be cured within the 35 day period, and the Trustee’s deed will have a more current figure based on the auction date.
Sometimes the bank will bid significantly below the trustee’s deed balance. This can happen because of deferred maintenance or damage that occurred to the property between the time the notice of default was filed and the trustee’s deed was recorded. Some banks are hiring 3rd party inspectors to evaluate properties for deferred maintenance, mold, leaks, etc., and will reduce their bid by the estimated cost of remediation.
If you’re handy, you can pick up a steal. If you’re not, you can find yourself in the house featured in “The Money Pit.”
But it’s not a comedy.
Janice Duis
What are customary seller vs buyer closing costs and in particular the title costs –who pays for what?