Foreclosure Brokers LLC - Frequently Asked Questions for Buyers

Frequently Asked Questions for Buyers

What role does Foreclosure Brokers play?
What is the process and the timeframe?
How do you get paid?
Can the seller pay concessions or incentives?
Will the Loss Mitigation Service Fee cause me to pay more for the home?
Why am I asked to pay Seller’s costs that their lenders will not allow?
How much should I offer?
Will the seller accept my offer?
What else do I need to know?
Can the seller remain in the property as my tenant?

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What role does Foreclosure Brokers play?

Our role can be thought of as overall transaction coordinators of the short sale process. We coordinate with you, the sellers, real estate brokers, lender(s) and the title company to get your offer approved by the sellers' lender(s). We negotiate your offer with the foreclosing lender and provide the final short sale approval(s) to the title company so your closing goes smoothly. We also help you understand the process and the status of your offer during the procedure.

What is the process and the timeframe?

Once your offer and the seller's paperwork are presented to the bank(s), it can take between 40-75+ days for the final approval to be issued at which time you can complete your due diligence and move towards closing. If a foreclosure sale date is approaching within this timeframe the foreclosing lender will most likely postpone the sale date and allow enough time to close, assuming you offer is strong enough and you are proceeding in good faith.

How do we get paid?

We are paid 2% of the final purchase price from you as Buyer. You are not expected to pay more for the property because of the short sale negotiation fee. Instead, we recommend you simply request a 2% credit (concession) from the Seller in the offer to cover this closing cost.

Our fees are only earned if Foreclosure Brokers can obtain an approval letter for your offer from ALL lien holders so you can purchase the house free and clear of all obligations. Our Negotiators work hard to get your offer accepted because we only get paid if we are successful.

Can the Seller pay concessions or incentives to buyers?

Generally foreclosing lenders typically do not allow more than 3% of the final gross purchase price to be paid by a Seller as a credit and/or concession towards the Buyer’s Closing Costs in a short sale transaction. If you are seeking credits and/or concessions exceeding 3% (while accounting for payment of the short sale negotiation fee), understand that Foreclosure Brokers LLC may be unsuccessful in obtaining such credits and/or concessions more than 3%.

Will the Loss Mitigation Service Fee cause me to have to pay more for the home?

You are not expected to pay more for the property because you need to pay the short sale negotiation fee. Instead, we recommend you reduce your offer or simply request a 2% credit (concession) from the Seller in your offer to cover this closing cost. Additionally, most short sale properties are purchased below their true market value and there now will be a full time negotiator working to get your offer approved. Important: As soon as you are under contract, make certain that you talk with your lender regarding this 2% negotiation fee to make sure they will allow our fee to be paid by you. Please be sure to contact your real estate broker with your lender’s response on this.

Why am I asked to pay Seller’s costs that their lenders will not allow?
In some instances, the seller’s lenders do not allow certain title or closing costs to be paid by the seller. Exactly what is allowed varies in each transaction because each lender is so different. To address this possibility, because Seller does not have the ability to contribute, and although every effort will be made to eliminate or minimize these unexpected costs from the outset, we ask you as Buyer to absorb and pay these miscellaneous and unexpected costs at closing not to exceed $500.00.

How much should I offer?

Of course, you can submit any contract you desire. However, please consider a few issues:

Many buyers and their brokers feel that because it is generally considered a "buyer's market", that they can present a low offer and think it will be accepted. From our perspective, this is not the case. The lender's determination to accept or counter your offer is based on the "Fair Market Value" of the property.
You offer must be inclusive of all property defects. The seller and/or lender will not entertain repair requests. Your Inspection Objection Deadline should only be used to determine if you want to move forward with the purchase and cannot be use to

Short sales can actually be quite a competitive market. The lower the offer, the longer the acceptance time you can expect and the more potential you have to for another buyer to offer more than or and/or to get countered by the foreclosing lender. Offers that are accepted the quickest are at or above the list price and are considered "Fair Market Value" for the property being sold. Foreclosure Brokers LLC can review contracts to determine if the lender likely to accept them - just ask us. Cash offers and and those with quick closing times / few deadlines carry more weight than those which are contingent on a loan or have many inspections. So if you want to ensure success, always make your highest, best and cleanest offer at the outset.

Will the seller accept my offer?

The minimum requirements are:

You must understand our involvement and must agree to pay our fee and miscellaneous closing costs as part of the transaction.
You must be patient. Short sales can take a long time and because of the large amount of foreclosures in the country, the lenders are extremely backed up. Allow at least 60 days for approval.
Your offer cannot be contingent on the sale of another property.
The property must be purchased "As-Is".
You must be able to close within 30 days of approval.
Your Broker must allow for a reduced commission if required by the foreclosing lender.

What else do I need to know?

As buyer, we ask you to ensure that you are comfortable and clear on your obligations before you begin. Please carefully read the Letter to Buyer and Frequently Asked Questions with your broker. The seller especially is relying on you to perform as agreed and continue in good faith to close the transaction. This is a team effort and you are part of that team as buyer.

Can the seller remain in the property as my tenant?

No. Stay away from these at all costs! Two big reasons are: 1) The lender will not allow the seller to receive ANY benefit if the lender is taking a loss. To do so is fraud. Your involvement could be construed as assisting the seller in committing bank fraud. 2) If you set up rent payments with the old seller and they stop making those payments, you would have no choice but to evict them. Once an 'angel' investor, you would now fall under scrutiny for trying to protect yourself. Sellers in denial and distress may then claim you were "making them a loan" or present some other legal defense. This is the primary source of "Foreclosure Rescue Scams" you hear about in the news and the primary reason why investors end up in front of a judge with pre-foreclosures even if they meant well.