I am in the process of bidding on an reo property. The listing agent sent me a 16 page addendum and told me that I must get loan pre-approval through the lender, Countrywide. Since I already have pre-approval from another lender I don’t want to go through the process again. Signing the addendum requires me to give up so many rights I feel like I’m dealing with the CIA. Obviously, the bank is trying to avoid lawsuits. My question is: has anyone doing REO purchases been able to avoid the pre-approval & addendum and still get the deal done?
Funny you should mention this. I just wrote up an offer for a client buying an REO yesterday. I ignored their request to use this ridiculous 16 page addendum and sent them the pre-approval letter we already have. I was very friendly with the listing agent about this and he agreed to discuss it with the lender. We’ll see what happens. I’ll share my findings here about this later…I should have more info in a couple days.
We looked at a property on Saturday that had that attachment. I told the agent that I proof of funds letter and I shouldn’t have to go through the pre-qual process. Our agent said they’d find out for me.
REO properties require buyers to sign seller addendums. It’s the way it is. Some are long, some are short. Some require them with the submission of the contract, others once the contract has been negotiated. I have never had, or heard of a lender selling a REO property, not requiring them to be signed. One reason, the seller addendums supercedes the local RE contract. Remember, most lenders deal in many dfferent states, if not all 50. There are thousands of local contracts they would have to sent to their legal or closing department.
If an agent tells you they’ll talk to the lender about the addendums, then they are inexperienced! As the listing Broker, we have specific client instructions. Signed seller addendums are a guarantee.
“Proof of funds” is the same as cash to the lender. No pre-approval necessary, as long as the letter proves you have the cash to purchase.
Only a few lenders require pre-quals through their own companies. The process is painless and it works. For one, it weeds out out a lot of bogus buyers. It also, in a lot of cases, can help the buyer get his offer accepted. Remember, it’s a pre-qual not a pre-approval and buyers can always choose whomever they want to actually fund the loan.
I had my attorney draft a letter to CHL to negotiate some unfair clauses in the addendum. But the listing agent would not even submit the offer to the seller without me first signing the addendum. It was sort of the chicken and the egg. I wanted certain provisions in the addendum changed, but I had to sign the addendum, accepting all its terms, before the seller would even look at me. In the end, I signed the addendum and closed today.
As for the pre-qual, I was given the phone # of a local CHL mortgage officer who absolutely insisted he could not do a pre-qual, but had to do a full pre-approval, contradicting the MLS description & listing office. We got the listing office to provide another loan officer who was more than willing to do a pre-qual over the phone.
Thanks for the replies.