Securing your investment when you buy distressed homes should be of paramount importance as it is all too easy to make a monumental mistake that will send all your money and effort down the drain. Keep in mind that the sellers of foreclosed properties are under no obligation for provide full disclosure of the facts and information on the property. Discovery is the buyer's burden.
Which Contingency Clauses Should You Look Out for in Your Contract?
Putting in earnest money is a staple when you buy distressed homes for sale. The value of the required earnest money can be anywhere from one to three percent of the total value of the home. Keep in mind that should you decide to pull out from the deal, you cannot take this money back.
The essence of the earnest money is precisely to keep the buyer from not going through with the purchase. Buyers can impose contingency clauses to contract in order to protect the earnest money. It is popular to demand that the earnest money be returned should there be significant damages in the home that came up after the home inspection.
The Comfort of Strangers
Most of the parties that buyers will deal with when they buy distressed homes each have their own interests to protect. It is to be expected that they will stop at nothing to ensure that the deal pushes through, regardless of whether it is actually good for the buyer or not.
Buyers need to have an impartial observer throughout the whole deal. You can enlist the help of a lawyer who is knowledgeable in foreclosures to stand as the uninvolved third party. His viewpoint will not be influenced by personal interest as he has none as far as the transaction is concerned. The only thing in it for him is the buyer's payment for his services. He will be objective as long as his fees are taken care of.
Before laying down you signature on the contract to purchase foreclosures make sure your interests are covered. A contingency clause and an impartial opinion are just some of the ways to safeguard your investment.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.