Here’s the question:

I’m a first time home buyer. I recently try to purchase a REO property which own by SPS Select Portfolio Servicing, Inc. While reading through the contract, I find it really long (11 pages) and not very easy to understand. Is this normal for a purchase contract to be that long? Does anyone happen to read this contract before? http://my.core.com/48/82/reoman/webpage/Select_Portfolio.pdf
Please advise. Thank you!

My Answer:

First. STOP what you are doing.

A first time home buyer should never attempt to buy a foreclosure from a bank or an REO property. That is home buying suicide. Only professionals who have experience in this area should attempt this.

For example, the contract you mention holds the following clause:

“AS A MATERIAL PART OF THE CONSIDERATION TO BE RECEIVED BY SELLER UNDER THIS AGREEMENT AS NEGOTIATED AND AGREED TO BY PURCHASER AND SELLER, PURCHASER ACKNOWLEDGES AND AGREES TO ACCEPT THE PROPERTY IN “AS-IS,” “WHERE-IS” CONDITION AT THE TIME OF CLOSING, INCLUDING, WITHOUT LIMITATION, ANY HIDDEN DEFECTS, ENVIRONMENTAL CONDITIONS AFFECTING THE PROPERTY, OR THE EXISTENCE OF MOLD (AS DEFINED BELOW), WHETHER KNOWN OR UNKNOWN, WHETHER SUCH DEFECTS OR CONDITIONS WERE DISCOVERABLE THROUGH INSPECTION OR NOT.”

This means the bank is not providing the basic warranties an existing home seller contract would automatically contain. An existing seller is held responsible for undisclosed title issues, environmental violations, and to make repairs to correct those issues should they arise during the inspection phase of buying the home.

Banks DO NOT Repair foreclosure homes(Look at the repairs clause: “Repairs. Unless otherwise provided in Section 28 of this Addendum, Seller shall have no obligation to pay for or perform any inspections or repairs to the Property whatsoever.”)….nor can you sue them if you find after the sale the home is unsaleable for any reason whatsoever.

Do not attempt something you are not prepared to do because you think you’ll save money. There are plenty of home owners out there who will give you a deal without the risks involved in REO or foreclosure buying.

Thanks for the question!

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