Bank Owned Properties; their foibles
Some market savvy and very loyal former clients of mine have decided to pursue the notion of investing in real estate. The return on investment can be lucrative. It can also be a harrowing experience depending on what type of property is being purchased. Such is the case with bank owner properties.
My clients, who I consider friends, and I looked at several homes and they decided on a newer bank owned property. I phoned the listing agent prior to making an offer and inquired about the banks policies for offering and any additional addenda that the bank might require. Each bank is different and they all make up their own rules and they typically have oodles of addenda. The listing agent informed me that we should just offer on the standard North Carolina offer to purchase and that once we’d come to a meeting of the minds; he’d provide the banks various addenda. I wasn’t pleased and told him so, I wanted to read the banks addenda prior to offering so that I could be prepared for pitfalls, landmines and expectations. We moved forward as the listing agent had encouraged and offered on the property.
Quickly and without too much pain or delay we came to a verbal meeting of the minds and the banks addenda were forwarded to us. Wow! In a nutshell the bank essentially said; buy the property as is, fine; buy the property and we hold your earnest money, not so fine; buy the property and close on time or we’ll charge you $100 per day for each day you delay, not fine; buy the property and if there are any pending assessments, we prorate them, also way not fine, generally in North Carolina if you own it when it’s assessed then you own the assessment. The bank essentially gutted any rights that a buyer of real estate has in North Carolina under our due diligence offer to purchase and contract. So, the buyers after much discussion and deliberation and numerous phone calls to the listed properties H.O.A. whereby I attempted to discover if there were any assessments; withdrew their offer. By the way; the H.O.A. manager has yet to respond to my numerous messages and emails, now five days out. This will be the topic of my next posting.
The buyers never went to ratified contract; which is when all parties have signed and initialed any changes made to the offer. Yet the listing agent requested that we sign a termination of contract as a courtesy to his client, the bank. Huh? The bank and the listing agent didn’t have the courtesy to provide requested information to us prior to offer and we never had a ratified contract so what exactly was being terminated? We had already withdrawn our offer in writing. I think based on what I’ve seen in Triangle Multiple Listing; the listing agent gets a whole bunch of listings from this particular bank and he doesn’t have the gumption to say to his client; we need to disclose to buyers what our addenda are before we start negotiating. He also operated repeatedly from a position of just do it our way and it will be ok. Um, no, NOT OK!