Dear Michael: We are first-time buyers considering purchasing a foreclosed home, as they are priced lower than standard-sale homes. Are foreclosures a good idea for first-time buyers?
Answer: A foreclosure property is a home that has been repossessed by the lender because the owner has failed to pay the mortgage. Currently, there are thousands of homes in foreclosure. Economic conditions are the number-one factor contributing to foreclosures. Many people are losing their homes due to job loss, credit problems or unexpected expenses. It is wise to be cautious when considering a foreclosure. Many experts, in fact, advise buyers to hire an experienced Realtor or attorney to take them through the process. It is important to understand the purchase contract or any addendums that are initiated and written by the foreclosed seller. These are complex and are unfamiliar to most Realtors. Your agent will have to read trough every line to make sure there are no clauses that could be a surprise down the road.
Most foreclosures come without any type of credits for repairs or termite work paid by the seller. These are sold “as is.” Buyers should have the house thoroughly inspected and make sure they have satisfied themselves with the home before removing their contingencies.
Dear Michael: My friend bought a house a few months ago and I agreed to be the co-buyer. Now, I want to get off of the title because my friend now says that he will not be able to make these payments because his wife lost her job. What should I do?
Answer: You’re not the co-buyer. You are an owner of the property and I presume you’re name is listed on the mortgage as well. As far as the mortgage lender is concerned, you are (and always were) considered a primary borrower on the property. If your friend fails to pay the mortgage, the lender will come after you for the money, and his failure to pay on the mortgage can hurt your credit history and credit score.
The only thing you can do now if you want to protect your credit history and score, is to make the payments on this property. If you’re listed on the mortgage, you’re legally liable for those payments. If you fail to make the payments, the lender will foreclose on the property and it will harm your credit. If you can’t make the payments, tell your friend to move out of the property and find a renter to help defray costs until you can get the property sold.
Unfortunately, you’ve discovered the primary danger of “lending a signature” to someone. If that friend suddenly can’t afford to make the payments, you’re on the hook. For more details, seek the advice of a real estate attorney.
Dear Michael: I have an interested buyer who submitted an offer on my property. I did not have a good impression or perhaps I did not like the way she degraded my home when she was previewing it. I would rather not sell my home to her. What I should do?
Answer: This is one of the many reasons why a seller should not be home when a prospective buyer previews a home. This incident is not common but when it happens, it can sour a deal and leave everyone wondering, “What happened?”
Stay away from the buyer for the duration of the escrow. There is no need for you to communicate with the buyer. Let the Realtors take it from here. Negotiate and resolve any kind of mishaps, minor or major.
To lose a qualified buyer in this market would be a huge mistake on your behalf. Emotions can and will sometime get the best of us. Put them aside and you’ll be satisfied when escrow closes and you have moved on.
Michael Kayem is a Realtor with Re/max/Execs, serving Culver City and the Westside since 2001. Contact Michael at (310) 390-3337 or homes@agentmichael.com.