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.