Every offer I write on a bank-owned home in Sacramento comes back with a bank addendum. Some are a few pages but most are at least 10 pages, and those addendums contain language that supersede the C.A.R. purchase contract. On top of this, lenders take their time getting back the signed contract, so the entire transaction, for the most part, takes place on a verbal without a signed agreement.
It's just the way things are when dealing with foreclosures.
Verbiage in the addendums say that the bank reserves the right to accept a higher offer at any time. Even on the day a buyer is scheduled to close. Although this rarely happens, it can and has.
It happened to an associate in my office. His buyers were about to take possession of the home when the listing agent called to say, "Hey, don't shoot the messenger, but the bank has received a higher offer and has decided to accept it." Well, that offer didn't drop out of the sky. The listing agent had to send that offer to the bank.
Don't you think it would have been professional of that REO agent to have called the buyer's agent and let him know beforehand? The buyer was not given any opportunity to increase the offer and now had no place to move.
I suspect there is a certain personality that excels at working REOs. The managing broker at my office has asked me why don't I go after REO listings rather than work as a short sale agent by listing short sales -- because short sales are a lot more work than foreclosures. But I can tell you why. When I work with short sale sellers or buyers, I am working with real people, knowing that I am orchestrating a difference in those sellers' and buyers' lives. I'm not dealing with some asset manager robot who cares solely about a corporation's bottom line. There is a human element to what I do.
The Short Sale Savior, by Elizabeth Weintraub, coming in June 2009.
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If you're interested in finding out more about Sacramento foreclosures or short sales, call Elizabeth Weintraub at 916.233.6759 or email me at elizabeth at elizabethweintraub.com.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
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Sounds like the process in the UK. At the last minute before the lawyers exchange contracts a buyer can be outbid or even better a buyer can say I'm not going to pay the price I offered and we agreed to.
OMG what a nightmare! The REO's I've worked have not had that kind of verbiage, and I can't imagine representing a buyer on one where the bank can accept a better offer until the day of closing... Just typical big corporations not realizing or caring that they're playing with people's lives...
I just closed a REO deal where the buyer was very aware of the clause in the bank addendum that allowed the bank to withdraw for any reason up to the closing...first time I've heard about one on the last day though.
Regarding your focus on short sales, don't you have to deal with the bank and the homeowner too, making the equation even more complex?
Thanks for sharing!
:) PS
Unbelievble that a bank would pull that one.... right or no right.
Hi Patrick: Actually, no, I don't deal directly with the bank because if I did, I would not be the happy-go-lucky person that I am. I do the pricing of the short sale, the marketing and I talk to buyer's agents. My associate, a licensed real estate agent and law school graduate, handles the direct negotiations with the bank. She has the temperament for it, whereas when I talk to the banks, I get too irritated, and it ruins my entire day. LOL.
I hate short sales and forclosures. I closed the last one a few weeks ago that took 4 months. They are stressful for all involved except the banks. From now on, I will refer them out to agents that like to do them. I have enough to do with buyer clients and sellers. Actually, I'm swamped with good clients right now.
Amen, Elizabeth. The bank always wants the deck stacked in their favor and it's either their way or the highway....
Elizabeth: That's the same reason I would rather work listing short sales than REOs too. Banks seem heartless and just plain stupid sometimes. Don't think I'd enjoy being their front gal.
Holy freaking s**t, Elizabeth! I wouldn't shoot the messenger; I'd deliver a personal baseball bat to the SOB. That raises the whole ethical question again... and common courtesy... that are so blatantly lacking with REO agents these days. Jeez Louise! I too would never be able to work for banks. One of us would die, and either way, it wouldn't be pretty. ;-)
I have never heard of such a clause. I would think the listing agent would want buyers competing on the listing not to mention getting agent irritated with him for not telling of another offer.
Well, that verbiage is contained in the addendums for bank-owned homes. It's rare that it happens, but this case certainly points out that it does indeed happen. Buyers of foreclosures need to be forewarned that this is a possibility. That bank can rip the rug right out from under you on closing, and there is nothing that you or your agent can do about it.
Elizabeth,
Both REO and short sales are tough business. The banks use the addendum and they set the rules. It does not surprise me. You may snatch a property at terrific price, but you may be sirprised by the Lender. Price for REO.
This is a bad scenario for a buyer. I've never had anything like that happen. In fact most of them don't want any more submissions after an offer is accepted. That's more like it should be.
Most banks just want to unload the property as quickly as possible. Wouldn't the offer have had to be significantly higher to make it worth their while to wait for the whole buying process to be completed?
Elizabeth
What a nightmare; I just had a commercial short sale that at the closing the portfolio lender started to have doubts again.
Hope all is well
Tom
Elizabeth - I feel sorry for those poor buyers! I hope they found something better... :)
Wow, that is really not a very professional way to handle a transaction. I can only imagine how frustrated the buyers were with the whole process.
I have a bank owned home under contract right now and I am off to double check the addendum to make sure that the clause is not in there!
Best,
Scott