problems trying to buy a house

**crxgator** · 12-16-2009, 03:06 PM

To start off, we are first time home buyers and my girlfriend and I have our eyes set on this one house that is foreclosed. After the whole nonsense of a bidding war, our offer was finally accepted.

The house was on the market for $134,900, and 3% back if you used GMAC for financing (they are the owner of the house).

Our offer was placed on Nov. 24 for $134,000, 6%, and $1500 towards appliances. They did not respond to our offer until Dec. 8th and counter with a $134,900 and $5000 back at closing which we accepted.

On top of that, we were told the house comes with a 1 year warranty from GMAC (does anyone know anything in regards to this type of warranty).

Now, it gets really tricky. We were told it had to be closed by Dec 31st, and in the contract they didn't mention anything about a warranty, nor the $5000 back. They also put in that there would be $100 fee any day after the 31st, it wasn't closed. (Can they do this? Considering the bank is the owner and would be the mortgage company for us?)

Our lawyer did an amendment and sent it in for us also. He put in the warranty, the $5000, and took off the $100/day fee and also made it clear that the sellers were paying the Transfer Tax because in the contract one section said we pay, and the other said the seller paid.

Well according to the listing agent he said that the REO contract is non-nego. Is a REO contract his agency's contract or a bank contract?

There were other stipulations that we didn't like, specifically them being able to back out within 10 days. We had an inspector ready to go today and had to cancel because we were told they accepted another offer.

Now I see they relisted the house for $124,900.

We are in a mess about this. Is there anything I could do to go over the listing agent's head? Talk to the bank about his deceiving practices?

The house is located in Ulster County, NY if that matters.

Thank you

**REITrainingWhse** · 12-16-2009, 06:45 PM

Added: First I am NOT a RE agent - just a seasoned RE investor.

Originally Posted by crxgator

To start off, we are first time home buyers and my girlfriend and I have our eyes set on this one house that is foreclosed. After the whole nonsense of a bidding war, our offer was finally accepted.

Ahh, to be naive again... Not to be a jerk - let me try to help you out.

Key #1 to buying a home - Don't get emotionally attached to a property - you will pay too much and overlook things that you shouldn't. (unless that is what you want to do.) You have to remember a house is just a house, and there are 100 more just like it around the corner.

I can see that since you were in a "bidding war" (as you called it) you were not playing the game right - far too many in inventory to bid what the lender is asking - as you later found out, when they accepted a lower bid than yours.

Originally Posted by crxgator

The house was on the market for $134,900, and 3% back if you used GMAC for financing (they are the owner of the house).

Typical scenario...

Originally Posted by crxgator

Our offer was placed on Nov. 24 for $134,000, 6%, and $1500 towards appliances. They did not respond to our offer until Dec. 8th and counter with a $134,900 and $5000 back at closing which we accepted.

Now, it gets really tricky. We were told it had to be closed by Dec 31st, and in the contract they didn't mention anything about a warranty, nor the $5000 back. They also put in that there would be $100 fee any day after the 31st, it wasn't closed. (Can they do this? Considering the bank is the owner and would be the mortgage company for us?)

Interesting... so this counter ($134.9K and $5K back) came as a verbal? Or did you accept something that you didn't read - since I am confused with what you said - you signed a counter and then they gave you another document (which didn't have the agreed terms?)

As for the $100/day late fee, that is typical.

So please clarify.

Originally Posted by crxgator

Our lawyer did an amendment and sent it in for us also. He put in the warranty, the $5000, and took off the $100/day fee and also made it clear that the sellers were paying the Transfer Tax because in the contract one section said we pay, and the other said the seller paid.

That is such a typical newbie mistake - in fact it was the deal killer! Everyone NEEDS TO KNOW that lenders hardly ever pay anything back, and they certainly don't amend things (in all the cases I have dealt with.) I sure hope you didn't have too much down as earnest money.

Originally Posted by crxgator

Well according to the listing agent he said that the REO contract is non-nego. Is a REO contract his agency's contract or a bank contract?

The lender's agreement - remember the lender holds all the cards - and makes all the rules. Either play their game, or they will move on. And like I said - I have yet to see a lender amend an agreed contract.

Originally Posted by crxgator

There were other stipulations that we didn't like, specifically them being able to back out within 10 days. We had an inspector ready to go today and had to cancel because we were told they accepted another offer.

See - the lenders play by their own rules. It was nice of them to give you 10 days - I have seen contracts from lenders where they could decide not to execute just before closing.

Originally Posted by crxgator

Now I see they relisted the house for $124,900.

Yep! Like I said, you blew it when you attempted to amend - you gave away your hand as someone who doesn't know how to play the game and the lenders think that the lower offer has a better chance of closing. Like the buyer was able to close (with PURE CASH) within three days of acceptance, or hundreds of other things that made the lenders think that the deal was going to get done before the end of the year -- You MUST understand that lenders want things off their books at the end of every quarter, and the most push is at the end of the year. By submitting an amendment showed the lender that the deal most likely wasn't going to close by the end of the year.

Originally Posted by crxgator

We are in a mess about this. Is there anything I could do to go over the listing agent's head? Talk to the bank about his deceiving practices?

Decieving practices?? Hmm, nothing atypical about your situation - there is nothing that can be done - but maybe you have learned from your mistakes and you will be better prepared next time.

Sorry for your loss - learn from it - better luck next time.

**crxgator** · 12-16-2009, 07:15 PM

this isn't our dream house and we have been looking since April. We have lost out on numerous houses at this point. This house is a pretty good investment especially for the price and the way the market is now.

We have been in bidding wars before and lost, so we decided to put in the offer we had to begin with (same offer as before the bid).

However, the 15 days to close is impossible. Even 30 days is pushing it and we are in the holiday season so closing by the 31st is impossible.

We put in our binder but never signed a contract as we didn't like the $100/day garbage. The seller paying different fees various from state to state from what I'm told. As they are paying for certain things, and vise versa.

We talked to our real estate agent and we are going to talk with our lawyer tomorrow and probably resubmit another offer. We are thinking of $130,000 with 6% back and 45 days for closing.

**BoiseRealEstateSoup** · 12-16-2009, 11:41 PM

It sounds like you accepted the agreement as it was offered to you in the counter and then tried to amend what you didn't like later in the game.

You can't amend items in a Purchase & Sale Agreement (PSA) without the written consent of every party. Nor can you assume that if it's not in writing that it amounts to anything.

Are you working with a real estate agent or not?

**REITrainingWhse** · 12-17-2009, 03:49 AM

Originally Posted by crxgator

this isn't our dream house and we have been looking since April. We have lost out on numerous houses at this point. This house is a pretty good investment especially for the price and the way the market is now.

Well, that is good - dream homes generally become NIGHTMARES, if they cause you to overpay and overlook issues.

Originally Posted by crxgator

However, the 15 days to close is impossible. Even 30 days is pushing it and we are in the holiday season so closing by the 31st is impossible.

Impossible? Yes, if you are funding this with conventional/institutional lending - I have closed houses in three days, (the lender called and told me they would accept the offer, if I could close that Friday [a quarter's end] and they called on Wednesday.) Needless to say I have the house

and it was at $0.25 on the dollar. If you have your own $$ or know places to get it ($HM$ or $PM$ [hard or private money]) you would be amazed at how fast one can close when the deal is right.

Originally Posted by crxgator

We put in our binder but never signed a contract as we didn't like the $100/day garbage.

So you really didn't accept the lender's counter-offer.

Originally Posted by crxgator

We talked to our real estate agent and we are going to talk with our lawyer tomorrow and probably resubmit another offer. We are thinking of $130,000 with 6% back and 45 days for closing.

Ahh, you just don't get it - you are playing the game like you are dealing with a homeowner as the seller, and not the lender as a REO. Well, you might have better luck when you are not looking at an end-of-quarter or end-of-year deadline - then again you will probably still get roadblocked by investors that have the means to close quickly.

Once again, good luck - keep on making offers - I am sure one of these times you'll match what the lender wants.

**crxgator** · 12-17-2009, 07:03 AM

Originally Posted by BoiseRealEstateSoup

It sounds like you accepted the agreement as it was offered to you in the counter and then tried to amend what you didn't like later in the game.

You can't amend items in a Purchase & Sale Agreement (PSA) without the written consent of every party. Nor can you assume that if it's not in writing that it amounts to anything.

Are you working with a real estate agent or not?

I am working with a real estate agent, and you are correct, what we were told verbally doesn't amount to anything; which is why we put that on the contract as it will be written not just verbal.

**Greg** · 12-17-2009, 07:14 AM

Welcome to the world of foreclosures where there are no rules except for the stupid ones the banks make up when ever they feel like it.

The best thing you can do is just keep trying and don't let the banks bully you into making a mistake. Read all the fine print and be alert. If this one doesn't work out there are plenty more on the way. There will be at least another year of these foreclosures.

It sounds like you are playing it pretty smart. Good Luck