Don't Trash My House! - Advice for Buying Occupied Foreclosure

[Ashb]

My biz partner and I found a great foreclosure here in Edmonton that we want to hold as a rental. The property is being sold as is, where is, and in our offer we must remove a clause that says "When the Buyer obtains possession, the Property will be in substantially the same condition as it was when this Contract was accepted"

The property is occupied and if they trash the place before they move out then it our problem. This is our hangup, we're trying to assess if the risk is worth it. Compared to our average deals, financially this property would make us 10 to 25% more equity in our buy, renovate & hold strategy.

The property has been fully renovated (I think the work was done by the current occupants) and is in great shape which tells me they have pride of ownership and might be less likely to damage things on their way out.

Any suggestions on how we could mitigate our risk on this one? We thought we could try to get in touch with the current occupants and offer to buy their appliances (which are quite nice) since they are not included in the sale and try to build some rapport that way. It is rare in our area for people to damage the property on their way out but the risk exists. Thoughts?

 

[Seeley]

I would agree to drop the clause but make my offer $5000 less (what ever amount works), if they don't accept walk away. I would not agree to drop the clause without a reduction in price. If they accept go to the home owner and explain the situation offering to pay them the $5000 after they move out assuming no damage. Have your lawyer draw up the agreement.

As long as it's the same amount you reduce the offer by it doesn't matter what you pay the owners to not trash the place.

 

[neill]

Who are the current occupants - tenants or the owner in foreclosure? If it is the latter, can you deal directly with them? I would be surprised if it is through foreclosure, bank owned and still occupied.

 

[dplummer]

Contact the renters & offer them cash upon their moving if the place is left in good condition. Perhaps first & last for their new place. Only give it too them once they've moved & you inspect it together. Doug

 

[scoopert2000]

Ran into something like this a couple of years ago with a bank owned rental that still had tenants living there. I did insist that it be empty on closing and it also had a clause like yours. Bank did not like it but I had the highest offer (just over asking) and they had to deal with it. It made for a longer closing (6 weeks) followed by another 2 weeks because they still hadn't moved out. When I finally did my walk through the day of closing the place was a mess. Having figured that this was going to happen I simply took some picture sent them off to my lawyer with instructions that I wanted 2000$ off or the place cleaned that day as I had a crew coming in the next day and I would go after the bank for any cost due to the delay. 2 hours later I had the keys and a cheque for 2 K

I would never forgo your clause on any ppty let alone a bank repo. The place could be burnt to the ground and you could still be forced to buy. Plus putting it to a bank and cashing that cheque was a lot of fun