Foreclosures are up across the country.  Utah usually ranks higher than average in foreclosure rates.  At this time, we have moved closer to the bottom.  That is good news.  That means that the rest of the country is experiencing higher foreclosure rates than normal but Utah’s rate has remained steady.  This shows that we are not being affected by the same problems plaguing the rest of the nation.   While I am not saying that we are doing well in foreclosure rates, I believe our problems are based on some other phenomenon than the current “mortgage crisis”.

 However, I am concerned with the way people react when they do  receive that “Notice of Default”.   Too many people do not realize they still have options and give up.   They start packing up and walk away without trying to keep their home.  This is a mistake.  Many homeowners do not have to lose their homes just because they have received a Notice of Default. 

Having a foreclosure on your credit report can be devastating.  It takes years to repair.  If you can successfully sell your home before the bank takes it over, you can save yourself years of touble and heartache.   Once you have received the Notice of Default, you typically have about 90 days to remedy the situation.  Banks are foreclosing so many homes at this time that you may have even more time to find an better solution than foreclosure.  Options may include selling the home, short sale, defer payments, etc.  

If you have received a Notice of Default, don’t waste time.  Call a professional and find out what your options are.  I would be happy to  offer any suggestions and help you get in contact with those that may be able to help.  Feel free to call me. 

First National Bank, a prominent real estate lender, had a billboard: 
The message read: 

“Loans make life easier at FIRST”

I am concerned with a few points in the new Real Estate Purchase Contract (REPC).  The new REPC has taken away any warranties from the seller concerning the condition of the house.   This puts all the burden on the buyer to evaluate and inspect the property before the Buyer Due Diligence Deadline.  BUYER BEWARE is Utah’s new policy.

I think that this is going to be as bad for the seller as it is for the buyer.  It is my experience that buyer’s remorse is real and once under contract, more buyers than you would realize, start second guessing their decision and begin looking for a way to get out.  

So, buyers now have until the Buyer’s Due Diligence Deadline to do all the evaluation and inspections they can to determine if their large investment is a sound one.  Not the end of the world but it was comforting to know in the old REPC that the seller was responsible to make sure the roof and foundation did not leak or that the furnace did not have a cracked combustion chamber, etc. 

The reason this becomes a problem for the seller is that the new REPC also has a Financing  Deadline.  If the buyer is not happy with the terms of the loan, they can back out and keep the earnest money.   This deadline is almost always going to be after the Buyer Due Diligence Deadline.  The intended purpose of this new Financing Deadline is a good idea but I see it being abused by ”less than honest” people that will use it to back out for reasons that have nothing to do with the intended purpose of this clause.  For the point of this post, I believe it will be used to back out for the due diligence reasons. 

For instance, the ”Buyer’s Due Diligence Deadline is Nov 7 but the buyer’s inspector for some reason suddenly cannot do the inspection until Nov 6.   They ask the seller for an extention of the deadline so they will have time to evaluate the results and negotiate any repairs with the seller.  The seller does not get back to the buyer in time which means the buyer must cancel the contract or waive their inspection rights, the buyer does not want to cancel so they move forward.  They find out that the furnace combustion chamber is cracked but their due diligence deadline is gone.  They no longer have the right to negotiate the replacement of the furnace, so, they say that they do not like the terms of the financing…even though backing out has nothing to do with the financing terms. 

The solution, I believe, is that sellers should start having their homes inspected once they decide to put it up for sale.  It has typically been the buyer’s responsibility to hire and pay the inspector.  Now, if the seller gets an inspection up front, they can disclose any findings to buyers, saving the buyer time they can use to negotiate which things should be fixed, making them more comfortable with the investment, making it less likely for them to back out later. 

It would be even better if the seller repaired any problems the inspector finds in the beginning.  In a market like ours, this could make your home much more attractive to one that has not been inspected, leaving the buyer to feel apprehensive.   In a Seller’s Market, this strategy may not be necessary, but when your home is faced with tough competition, this could give you an edge.  Also, once under contract, it could help you get to closing when the new REPC seems to be stacked in the buyer’s favor.