In real estate it has always been about “location, location, location”, and then along comes REO.  Now it’s about “price, price, price”.  We all know that “price” sells; it always has but let’s not get too carried away.  There is a “great price” and then there is a “ridiculous offer”.   It is so tempting in these challenging times to see just how low the seller/bank will go.   This is not about throwing a dart at a price on the wall.  It pays to work with an agent who understands the subtlety of appraisals, the net carry value (what is owed the bank by the previous owner), the value of the neighborhood, etc.  If you are serious about a foreclosure, do your homework.  Make an offer that makes sense.  Demonstrate to the seller that you are a serious buyer not just a bottom feeder.  When the seller knows you are serious, thoughtful negotiations will begin.  Throw out low ball offers and the seller will more than likely come back to you at full price.  A good deal is a good deal for everyone involved in the transaction.  The buyer wants to feel like they got a good value at a great price.  The bank wants to feel like it has done its fiduciary duty and accepted the best deal it could, under the circumstances, for its stockholders.

With that being said, there was some good news about the buying process this past week. 

The National Association of Home Builders will be tackling four issues that are critical to the housing sector which comprises more than 15 percent of the GDP.

 (1)   The NAHB is calling on congress to extend and enhance the $8000 first time home buyer tax credit.  They are calling for an extension of the bill to November 30, 2010 and make it available to ALL buyers of principal residences.

 (2)   Correct the faulty appraisal process.  The inappropriate use of distressed and foreclosed sales as comps in determining home values is hurting home values and killing home sales.  NAHB is urging Congress to work with housing and federal regulators to adopt and enforce clear, concise regulatory guidance that will allow appraisers to develop realistic valuations based on sales that are truly comparable.

 (3)   Improve housing credit conditions.  The NAHB is calling on Congress to urge regulators and the banking industry to end the stranglehold on acquisition, development, and construction loans that has emerged as a major impediment to the housing recovery.

 (4)   NAHB will also co-sponsor Net Operating Loss (NOL) relief legislation in Congress.  This would help prevent further layoffs in building and other industries hit hard by the recession.

But there has been some confusion surrounding such homes, regarding the bank seller’s obligations according to the Georgia Condominium Act.

That’s why I was so impressed with Seth Weissman’s recent newsletter article about the topic.  Having practiced law for more than 30 years, Seth, partner at Weissman, Nowack, Curry & Wilco, certainly understands the complexities of the Georgia Condominium Act.  Below is his full article.

SELLING BANK-OWNED NEW CONDOMINIUM UNITS

Many brand new, never previously sold bank-owned condominium units are now

on the market for sale. A question which is increasingly being asked about such units is

whether the bank seller must comply with the consumer protection requirements of the

Georgia Condominium Act in selling these units. The answer, as explained below, is an

unequivocal yes!

Georgia law requires that consumers be given certain special protections in

buying condominium units that apply “to the first bona fide sale of each residential

condominium unit for residential occupancy by the buyer, any member of the buyer’s

family, or any employee of the buyer.”1 The consumer protections apply to “any such

sale regardless of whether the seller is the declarant, the association, or any other

person.”2 Therefore, the requirements apply to bank-owned condominium units that

have not been previously sold. The protections generally fall into three categories.

First, the sales contract is required to contain certain disclosures in bold-face

type warning buyers of issues to consider before purchasing the unit. Therefore, a GAR

condominium unit sales agreement cannot be used because it does not contain these

disclosures. More importantly, there is a standard set of disclosures that can be

attached to all contracts to bring them into compliance with the law. The nature of the

disclosures made will change depending on the type of condominium unit being sold.

So, for example, the disclosures in a unit that is part of a condominium conversion are

different from the disclosures for a newly-constructed condominium unit.

Second, buyer must be given a bound copy of a condominium disclosure

package and sign an acknowledgment that they have received the same. For two

reasons, banks should not simply use the condominium disclosure package prepared by

the original developer or “declarant.” The Georgia Condominium Act requires that the

disclosure package be current. The foreclosure will often result in a new declarant and

this must be reflected in the disclosure packet. The passage of time will normally result

in the condominium association’s budget being out of date. Additionally, if the bank

merely hands out the original disclosure package, it runs the risk of being legally liable

for any misstatements, or out of date statements, of the original declarant. Therefore, at

a minimum, the bank should carefully review the condominium disclosure package which

is being used to be certain it is current, accurate and complete.

Third, buyers who are purchasing previously unsold condominium units for

residential occupancy must also be given a seven-day right to rescind or back out of

their condominium sales contracts. The seven-day period does not begin to run until the

buyer has signed a contract and acknowledged in writing the receipt of the condominium

sales contract. The Georgia Condominium Act is silent on whether a buyer who was not

given a current condominium disclosure package can rescind after they have closed on

the purchase of their unit. However, the likelihood is that they can.

It should be emphasized that this section of the Georgia Condominium Act is one

of the few which provides that the “willful violation of any of the requirements of this

Code section by the declarant, the seller, any sales agent or broker, or any other person

shall constitute a misdemeanor.” Since there is a risk of criminal prosecution for failing

to comply with the law, this is definitely an area where an ounce of prevention is worth a

pound of cure.

In real estate, it has always been about “location, location, location”…and then along comes REO.  Now it’s about “price, price, price.”

We all know that “price” sells; it always has but let’s not get too carried away.  There is a “great price” and then there is a “ridiculous offer.”   It is so tempting in these challenging times to see just how low the seller/bank will go.   This is not about throwing a dart at a price on the wall.  It pays to work with an agent who understands the subtlety of appraisals, the net carry value (what is owed the bank by the previous owner), the value of the neighborhood, etc.

If you are serious about a foreclosure, do your homework.  Make an offer that makes sense.  Demonstrate to the seller that you are a serious buyer not just a bottom feeder.  When the seller knows you are serious, thoughtful negotiations will begin.  Throw out low ball offers and the seller will more than likely come back to you at full price.

A good deal is a good deal for everyone involved in the transaction.  The buyer wants to feel like they got a good value at a great price.  The bank wants to feel like it has done its fudiciary duty and accepted the best deal it could, under the circumstances, for its stockholders.