Buyers May Not WANT Condo Docs for Short Sales & Foreclosures

I was quoted in the Washington Post yesterday for my recommended strategy of NOT asking for condo docs on a foreclosure or short sale.

In the original article here, the author discusses the fact that:

Virginia law requires sellers or their real estate agents to get a presale financial disclosure packet from the association and give it to buyers. Buyers have three days to review the financial disclosures and rules governing life in the association and can back out of the deal if they don’t like what they see. In Maryland, buyers have seven days in which to review the documents and cancel the purchase. In the District, buyers are allowed three business days.

The challenge with short sales and foreclosures is that the sellers either can’t or won’t provide these documents (which come with a charge of several hundred dollars.) This leaves buyers in a tough spot — they don’t know whether there are any problems with the Association’s finances, for example, because they never received the packet. Sometimes buyers can pay for the pack themselves, but often Associations won’t give them to anyone but a current owner.

BUT, there’s an upside to this frustrating situation: Buyers who never receive the packet retain their right to back out at any time up until, and for 3 to 7 days after receiving them (depending on jurisdiction). See my quote here:

Katie Wethman, a real estate agent in McLean, pointed out a way to game the system. “It can be a strategic choice not to ask for the documents,” she wrote. “Buyers retain a right of rescission up until, and for three to seven days after, the receipt of the documents. If the buyer is concerned about timing, financing, finding a better deal, or just getting cold feet, they may wish to delay receipt of those documents as long as possible. They may forgo them altogether in an attempt to keep their right to walk away right up until settlement.”

So talk to your agent about your situation and whether it makes sense to try to obtain the documents or not…you may come to regret having asked for them.

Scared about taking on a short sale or foreclosure home because of the rehab work involved? Consider purchasing one using an FHA 203(k) loan, described in my blog post here.

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First Time Home Buyer Class – Scheduled in Arlington

Note> For the most recent schedule of dates for 2008 and 2009, please visit the First Time Home Buyer class page at my website. Classes will be held in Montgomery County, DC, Arlington, and elsewhere in Northern Virginia.

The first classes of 2009 are now scheduled at Arlington County Library. As in the past, there is absolutely no cost or obligation to attend this one hour educational session where we will recap the current market conditions (including stats like days on market, inventory levels, and average sales prices), discuss the future outlook, and provide an overview of the home purchase process, including common pitfalls and financing basics. Simply contact us to register (enter seminar and the date in the comments) so that we may have materials available for you. Space is limited. Details are as follows:

Date(s):
Tuesday, February 17, 2009
7:15 pm – 8:30 pm
registration required

Logistics:

Arlington Central Library, 2nd floor meeting room
1015 N. Quincy St
Arlington, VA
Metro: Orange Line/Ballston

Cost: There is no obligation, and the session is FREE, but registration is required by emailing me at Katie@katiewethman.com. Seating is limited.

Related Link: Search the MLS

Read More: Working with Katie as Your Buyer’s Agent

Read More: Buyer’s Resources

Read More: $7500 Home Buyer Credit

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