Thursday, May 13, 2010

Short Sale Screw Job

Mister C and I put in an offer on a short sale almost seven weeks ago. We offered the full asking price with no contingencies. The owner of course, immediately accepted our offer. We've been patiently waiting for the bank to sign off on it.

On Tuesday, I got a phone call from the listing agent saying that the bank was going to approve our offer as written. Yay! Except for one small thing. The bank was refusing to pay the buyer's side commission to me. According to the listing agent, the bank never pays when the buyer's agent is the principle. And he knew this when the offer came in but chose not to tell me. But what the hell? What gives the bank the right to deny the commission to me? And to my broker?

I could (almost) understand if this was a foreclosure because then the bank would have the right to have whatever sort of commission they want to establish. But it's not. This is a short sale. The bank doesn't own the home. The bank doesn't have an agreement with anyone. I signed a contract with the owner of the property and their listing agreement states that they will be paying a buyer's side commission. It shouldn't matter that I'm representing my husband and I instead of paying another agent to do so. The bank does not have the right to deny me my commission just because their client is not honoring their original contract. Why should I get punished for the bank and the current owner's greediness?

That's right, greediness. The current owner on this house pulled one hundred thousand dollars in equity out of the property at the high point of the market. I have no idea what they did with the money but I can almost guarantee that they didn't put a dime into the property they refinanced. As the market was falling, they went out and bought a bank owned property in a prestigious neighborhood. Then they put renters into their original home. At some point early this year, they quit making the payment on the property. I don't know if their renter left and they couldn't make the payment anymore, or if they just got tired of being landlords. It doesn't really matter. The point being that they quit making the payment sometime this year. They decided it was better for them to no longer honor their contract with the bank.

At the time of the refinance, the bank more than willingly loaned the extra money on the home. I'm sure they got paid some nice fees to do the job so they did it. Earlier this year however, it probably occurred to them that it wasn't such a good idea when the homeowner quit making their payments. Now they were about to be stuck with a deficit between what they were owed and what the market value of the house was.

So here come Mister C and I, looking for a nice property in our own neighborhood that we can use as a rental. It's a great neighborhood (if I do say so myself), the elementary school is walking distance and the newest high school is just around the corner. A perfect scenario for us. We do some math and realize that although the repairs are going to be around ten thousand dollars, my commission check will be able to cover at least some of that. So we put in an offer. And because we know we're not trying to "flip" it for the most profit possible and because we're not trying to screw anyone over, we put in an offer at full price. We don't ask the seller, or the bank for that matter, to pay our closing costs or for any repairs. Full price offer. No concessions. Why? Because we want to do what's fair. We don't want to low-ball the price and try to steal the house from the bank. Silly, silly us.

Guess we'll try on a different property at a later date. And this time I'll use another agent to write the contract.