Special Adendum And Seller Nondisclosure
I am a new investor and in my search for homes, I see alot of "special adendum required and seller nondisclosure".
Can someone explain what this means?
And if these terms steer some investors away from the deal, why would the seller choose to sell this way?
I believe seller nondisclosure means they aren't telling you something about the property. I'd stay away from these, as I take this to mean they are hiding something. If nothing is wrong with the property then why wouldn't they tell me anything? I don't want to work with people like that and I don't want to run into a potential financial nightmare. Just last week an investor told us a horror story about water damage that was hidden and he wasn't told about it. He had missed the problem (because it was hidden from plain view) and when he got his inspector in there it turned out to be about $40k in fix up work. Yuck
Ryan J. Schnabel
Ryan's a bit incorrect here. Special addendums and no disclosures usually apply when the bank sell their REO property. I've yet to see an advertised property that's not an REO and has special addendums and lack of disclosure requirements. I am not sure how it is in Texas, but in Illinois a seller of residential property(1-4 units) has to give buyer a residential property disclosure about whether any defects in the property exist. Technically speaking, if the seller lies on the disclosure form, you can sue the seller. However, most banks don't want to have an even remote possibility of being bother with anything that's in regards to their REO property after the sale, so they make the buyers sign various addendums, etc. that indemnify them from any liability. Basically, it's a true CAVEAT EMPTOR. Bank says: we own it - you want it - you buy it at your risk - don't even think about coming back crying to us if there is a problem with anything other than title. In return, you do have a chance of paying less than a market value for the property.
Thanks compwiz. I think all the MLS listings that stated that were bank owned.
Thanks for the explanations.
Glad to help.