Anatomy of Foreclosure Listings

Real estate listing lingo can be annoyingly difficult to decode. And REO, or foreclosure, listings are often even more indecipherable. While much of the language is not intended for you, the buyer (it’s pertinent info for your realtor), it’s still helpful to know what they’re talking about. Here, a quick breakdown of some of the most common phrases you’ll come across in foreclosure listings.

So, what does “as is” really mean?
“All of the lenders are going to have an as-is addendum in the agreement,” says Mathew Ngo with 21 Century All Islands. “However, if the buyer is getting a loan and requires certain repairs, the seller will help with the repairs to help the buyer get the loan.” So, if the only thing holding up a sale is your lender’s requirements, then chances are good you can ask the seller to fix certain things. That said, it’s always best to ask upfront. “My dealings with lenders when the properties are REOs is they’re not as strict as people think they are,” says Ngo. “They’ll do it, as long as it’s asked up front. If you’re making an offer and you notice there’s a leak and some water damage, you’ll want to put that in the contract, and oftentimes the lender will accommodate.

A 10-day right to inspect
The property inspection contingency for REOs is always 10 days, which allows the buyer to have the property inspected. That said, even if the 10 days has expired and a buyers’ lender comes back with repair requests, they can often be accommodated. But, says Ngo, it’s always appropriate to have the property inspection contingency extended for the purpose of the contract.

Number of bedrooms does not agree tax records
You see this a lot, and depending on the type of loan a buyer is getting, it could present an issue in securing that loan. “The VA is not going to provide a loan on a property that has five bedrooms when on tax records it only has three,” says Ngo. “The main thing is, ‘Is it legal? Is it permitted?’ If not, some things need to be done and that can take time. Some lenders don’t care but with FHA and VA, if it’s pointed out on an appraisal report, it can be a problem.”

Cash offers require proof of funds
Buyers looking to pay cash, particularly over a certain amount, are often required by lenders to show that their cash is liquid.

There’s a $75 doc fee to be paid by buyer at closing
If you’re buying a condo, the doc fee is a customary closing cost. According to Ngo, lenders are often paying the doc fee now, but it needs to be put in the contract. “Our purchase contract has customary closing costs, such as contract docs, but if it’s not in the lender’s addendum, they won’t pay for it,” he says.