Sometimes the issue isn't winning the 'foreclosure competition'

Sometimes the issue isn't winning the 'foreclosure competition', it's closing once the Court approves your buyer's offer.
In a recent foreclosure, my client fought hard, outbid three other buyers, and won the bid. The Court approved my client's unconditional offer on February 2 for a March 8 closing, leaving about 5 weeks to close. Buyers were pre-approved, the lender was chosen, we just wanted to close this deal! 
What Happened
The Court's February 2 approval turned into a Court Order, which was sent for filing at the courthouse. 
The filed Order was required to make the deal unconditional. Because of COVID and the ultra-slow down at the courthouse, it took until March 4 for the Order to be filed. Only then did the listing Realtor send out the official conveyancing instructions. And, most importantly, only on Thursday, March 4, was the mortgage broker able to tell the lender that the deal was unconditional and to start finalizing the mortgage approval process. So there we are - the purchase is unconditional and ready to go on Thursday, March 4, for a Monday, March 8 closing, 1-2 days to close. 
I immediately asked the foreclosing lawyer for an extension. I wanted three weeks; he wanted to give me seven days.
Our mortgage broker did a great job and got us mortgage instructions before the seven-day extension was up. I then negotiated a further extension with the foreclosure lawyer, and the deal closed 10 days later.
Lessons Learned
  • Foreclosure properties are in demand and often sell at market prices.
  • If your client's foreclosure bid 'wins' and they are getting a bank mortgage, the lender needs what lenders need for every deal, a final, unconditional real estate purchase contract (offer to purchase). For a foreclosure purchase, that final, unconditional offer to purchase is the signed, filed, Court Order approving your deal. 
  • Buyers need to understand that most lenders won't even start processing a mortgage application until there is that final, unconditional offer to purchase. As a Realtor assisting a buyer, you have to work very closely with your buyer's mortgage broker. Make sure you know what the likely lender requires. It may mean an appraisal upfront, and it's crucial to have a backup plan. Either a private mortgage or cash purchase needs to be discussed with your mortgage broker in case the Courts/lawyer do not allow any extension. We had a backup plan; however, it was an expensive one. 
  • COVID affects everything, including everything to do with any court process, and that includes foreclosures. As a Realtor working through the foreclosure process, do your best to make your client, the Court and the foreclosure lawyer aware of timing. Your client might have made an unconditional offer, but they need time if closing depends on financing. 
  • Make sure the Court and the foreclosure lawyer know that your buyer needs two weeks to close AFTER receipt of the signed, filed, Court Order approving your client's purchase. Try to ask for a clause such as "This purchase will close 10 business days after buyer's receipt of filed Court Order." either in your offer or verbally if you are part of the Court application.
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