Painful House Closing…

[jimmy1977]

Hi CA Renter

I think the emotional toll it took on us made us reconsider. We actually had to make arrangements to cut short our travel, find new day care for our toddler. Almost had to find another place to rent. I think these just has made us too bitter to like this house. Plus like I mentioned we had 21 days to close, we removed the inspection/loan contingencies with 15 days – the seller knew their situation and did not inform us, which in my opinion was not very ethical thing to do. Hence our frustration.

—
Jimmy

[jimmy1977]

Thank you HLS for this advice. I completely agree was a nerve wracking 21 days for us. That has made us sore on this deal even more because when we were going through this trouble to get things in order the seller or their agent could’ve notified me about their situation.

Anyway we will keep this in mind the next time. 🙂

—
Jimmy

[bearishgurl]

[quote=jimmy1977]Hi HLS

We saw a couple of deals with this clause that beat us out when things earlier in the year. Our agent told us this might be a good distinguishing point in our bid.
Hence we put in the 21 day closing.

—
Jimmy[/quote]

jimmy, IMO, your agent did you a HUGE disservice. He/she should have insisted on a preliminary title report within 72 hours of opening escrow if they were too incompetent to check the public tax screen themselves, and, in any case, should have insisted on having the PTR in their hands. You, as a buyer are entitled to this knowledge early on, ESPECIALLY since you agreed to such a short closing window. Had they done that small 45-second task and found out both tax installments weren’t paid for FY 12/13 and a penalty was added, this fact would have alerted them to poll the listing agent mercilessly as to the condition of the mortgages, including seeing proof that the mortgages on it were up to date or threatening to rescind the offer. Any agent and/or broker worth their salt would not have put their buyer in such a precarious position in light of the fact of the multitudes of sellers that have been behind on their payments in recent years.

If it took you three weeks to get the PTR, you likely used the listing agent’s “recommended” title company so that he/she could intercept your report and your contingency approval period would expire without you seeing it. OR the “fix was in” so that your agent couldn’t get the report. OR your agent DID get the report but withheld it from you to buy time, while the two agents tried to put their heads together to figure out how to make this deal go through so they could make their commission.

You don’t really know how long these “sellers” have been squatting without making payments. For all you know, it could have been 6 months (since the first FY 12/13 tax installment was due and they had impounds) to 3 years. You (and likely your incompetent agent) doesn’t know how much of a short pay your seller’s lender(s) are now (at the 11th hour, lol) being asked to take, nor do you know if they will cooperate. IMO, the listing agent in this transaction is completely unethical and also incompetent if they think they’re going to successfully market a property that they KNOW is a short sale without advertising as such. And if they didn’t know it, they should turn in their license right now because they have absolutely NO IDEA what they are doing. Their broker should have advised them (and pounded it into their heads) years ago they they have a duty to let potential buyers know up front that their listing is a “short sale” so they can make an educated decision whether to place an offer or not. Here is a long version of Holmes’ holding but there are several online:

…Holmes v. Summer is a precise example of how the culture of seller dominance and the attendant and deliberate dilatory disclosures have gone awry, rendering the previously acceptable “standard operating procedure” virtually criminal. Certainly the willful withholding of facts, which are necessary for the buyer to determine a fair price and that the property is suitable to be purchased, is reprehensible conduct deserving of suspension or revocation of a license for dishonest conduct.

Holmes v. Summer provides a watershed moment in case law for brokers and their listing agents. Holmes reestablishes proper conduct for listing agents and their brokers regarding the timing of property disclosures (specifically title condition disclosures in the Holmes case). Holmes mandates that all disclosures of material fact about the property, known to either the seller or the listing agent, which might influence any of the buyer’s decisions about purchasing the property must be made to the buyer by the listing agent prior to acceptance of an offer, not after an offer is accepted and escrow is opened, as has become the generally accepted custom amongst brokers and agents today.

Listing agents are on notice: you must now Holmes-proof yourself and your seller in order to mitigate exposure to liability – up front risk reduction – and ensure that you are fully performing both your specific duty to your client as well as your general duty to the buyer.

Buyer’s selling agents beware: the listing agent’s custom is deeply ingrained and you will need to insist on full disclosure prior to preparing and submitting an offer. Market conditions with a dearth of buyers, such as we are currently experiencing, demand selling agents be more vigilant in securing the proper disclosures for their buyer…

http://firsttuesdayjournal.com/holmes-v-summer-dilatory-disclosures-and-the-damage-done/

The listing broker (if competent themselves) is well aware of the perils and brokerage liability of taking a listing of a delinquent homeowner without advertising it on the MLS as a short sale. By not doing so and accepting a buyer deposit and 21-day closing (as in a traditional sale), they are exposing their brokerage to buyer damages. That is why SS listings don’t require earnest money from a buyer whose offer was accepted by “sellers” until it is lender-approved and the buyer is still interested at that time and elects to open escrow. The “sellers” in these cases have no authority to “accept” any offers in reality and in any case, cannot convey clear title to anyone.

I don’t blame you for feeling you’ve been duped because I feel you HAVE, based upon your posts on this thread. These are just the type of “sellers” who would end up stripping the place before they leave and their agent would attempt to close the transaction anyway by not making it available for you to do a final walk thru at the 11th hour.

I’m still astounded by the level of sheer incompetency of RE agents and their broker oversight today … from the sublime to the ridiculous.

[(former)FormerSanDiegan]

We have purchased 4 houses over the years. Not a single one closed within the time frame originally agreed upon (usually 30 days). There’s always something.

I wouldn’t walk away immediately just because my loan lock expired (regardless of the length of escrow, you should have had a loan lock longer than 21 days anyway).

If the house is a good deal financially, I would try to make it work. If the rate difference between 21 days ago and now (up a bit) makes it no longer a good deal, then it was a marginal deal to begin with.

You gotta look at the big picture.

[HLS]

It is often the parties involved that can determine how long closings take, and the relationship with escrow, title, lender etc.

In the big picture, although it’s usually the largest purchase in someone’s life, it’s just another file to everyone else involved.
An underwriter or escrow officer isn’t going to rush a file because the buyer agreed to a fast closing.

Having agents or loan officers that are proactive and anticipate problems and deal with them promptly is what makes the difference.

Letting things sit around for 3-5 days each time and not following up creates delays and causes stress.

An agent encouraging a buyer (who needs a loan)to write an offer and close in 21 days and rushing to lift contingencies is irresponsible IMO.

Dealing with a lender who isn’t on top of conditions can also be full of headaches.
There are often going to be problems and delays but many times they can be minimized or avoided.
This becomes the difference in who you chose to deal with.

[bearishgurl]

FSD, that was my thought, too. Really, how much could the 30 fixed MIR rate have changed from 21 or even 30 days ago? And I agree that if it is even up a fraction of a point, that is not enough to kill the deal unless it really isn’t a “deal” to begin with.

I understand how hard it is for leveraged buyers to enter into and stay in a transaction today. But, based on jimmy’s posts here, I feel there is more at play here. He has a really bad agent who didn’t protect his interests when writing an offer and did not vet the sellers well enough before placing it his behalf.

I see a LOT of potential problems for jimmy if he wastes more time in the transaction:

-He could be required to pay “sellers” FY 2012-2013 back taxes plus penalty plus any accrued taxes after the beginning of the new FY, which begins July 1, 2013, in order to consummate the deal;

-He didn’t get the PTR until 15 days after he opened escrow and well after his contingency period expired (inexcusable and implies that sellers had something to hide);

-Seller could refuse to vacate at closing, or worse, vacate the day of closing and leave all their debris while stripping appurtenant items they believe are “theirs” (ie ceiling fans, custom blinds, fireplace enclosure, etc);

-He could be pressured to sign docs by his agent without first getting a comprehensive walk-thru to make sure the property is vacant and intact;

-He could be asked to pay the difference to “sellers'” lender(s) between the what is owed and what the lender will accept to consummate the sale (over and above his accepted-offer price); and,

-A NOD could be filed by a third-party trustee at the 11th hour thereby hosing up the whole transaction while jimmy’s rental gets re-rented because his LL thinks he’s moving.

etc, ETC….

It is possible this listing agent originally listed the property at a higher price trying to test the market to see if his/her “sellers” could get enough to break even and pay the taxes owed. But the minute he/she lowered the price enough to attract jimmy and possibly other bids, he/she should have delisted the property and relisted it as a “short sale” with the new price and stating clearly on the pfl that lender approval was needed. Instead the LA “pretended” that it was a traditional sale all along and required jimmy to post an earnest-money check with his offer … or at the very least, accepted that check from his agent without telling them that the listing was a short sale. “Sellers,” along with their complicit agent, “accepted” jimmy’s terms of a 21-day closing and short contingency-approval window all the while KNOWING they could not possibly perform as lender negotiations for the short payoff had not even begun. Meanwhile, jimmy is scrambling to hold his end up on the deal and “sellers” and their agent are thwarting him every which way by having their “selected” escrow company (“in-house” possibly?) send him another transaction’s escrow instructions TWICE and “sellers” selected title company waits 15 days to send him his preliminary title report. There is absolutely no excuse for that. Meanwhile, jimmy decides to avail himself of the public tax screen and finds out the taxes are delinquent, approaches his agent with the problem and he/she tells him, “It’s okay, there’s plenty of funds in escrow to pay them.”

If jimmy’s agent actually really did select services, than jimmy’s agent is entirely complicit in the failure to disclose to jimmy the condition of the title early on, whether the delays were caused by incompetence of the service providers … or not. Actually, jimmy’s agent could have gotten a “property profile” on the property in just minutes or hours, checked the public tax screen and wrote jimmy’s offer based upon that cursory information provided, which would have protected him much better. In addition, REALIST has some of this information available and if jimmy’s agent was worth their salt, they could have pieced it together and grilled the listing agent before drafting their offer.

I say the behavior and incidents described here in totality reek of gross incompetency and may even rise to the level of fraud … on the part of both sellers and both agents. I feel that, based upon his posts, jimmy is completely justified in telling them all to pack sand, after losing trust in these sordid players. Perhaps there is a way to arbitrate with the listing brokerage to get his appraisal and inspection money back (a few hundred?) or they will agree to pay him these damages up front to prevent him from filing a DRE complaint against them. Unfortunately, he doesn’t appear to have enough damages for it to be worthwhile to sue, and, in any case, needs to find a new agent and put this whole debacle behind him. If he can’t recover his earnest money because it has been commingled, that is a different story and is the prime reason for revocation of broker licenses in CA. But I believe he will be able to.

************************************************

If it weren’t for “lender malaise.” there wouldn’t be a platform on which to perpetrate these shady transactions of multiple overt misrepresentations (based on lies) and hook unsuspecting buyers into them. Delinquent sellers would have had their stuff set out on the street after the trustee auction and the marshal’s office (now sheriff) would have locked them out, as it was in decades past. The market has now picked up sufficiently to go back to the following the law in CA and do away with these moratoriums and extensions which have the effect of allowing even strategically-defaulting sellers to squat into oblivion. A RE transaction is stressful enough, (esp for FTB’s) without complicating it with the unsolvable problems of insolvent “sellers.”

[bearishgurl]

[quote=HLS] . . . Having agents or loan officers that are proactive and anticipate problems and deal with them promptly is what makes the difference.

Letting things sit around for 3-5 days each time and not following up creates delays and causes stress.

An agent encouraging a buyer (who needs a loan)to write an offer and close in 21 days and rushing to lift contingencies is irresponsible IMO.

Dealing with a lender who isn’t on top of conditions can also be full of headaches.
There are often going to be problems and delays but many times they can be minimized or avoided.
This becomes the difference in who you chose to deal with.[/quote]

I wholeheartedly agree, HLS, especially with the emphasized statements.

[bearishgurl]

[quote=flu][quote=jimmy1977]Update on the situation

We heard back from the selling agent. They told us now the house is a short sell. But they claim the bank is ready to close within 14 days. I don’t trust this anymore – we are going to follow bearishgurl’s advice and jump out as soon as our rate lock expires.[/quote]

Hi Jimmy…. I just sent you a PM. Can you check it ?
Thanks.[/quote]

Hello out there, flu . . . ;-]

Why don’t you come out of the shadows and tell the Piggs how you’ve been doing?

Why the cryptic msg after all these months? Did you finally get your RE license after you posted here a while back that you wanted to pursue one?

Or . . . shilling for someone??

Just wondering . . .

[livinincali]

[quote=bearishgurl]FSD, that was my thought, too. Really, how much could the 30 fixed MIR rate have changed from 21 or even 30 days ago? And I agree that if it is even up a fraction of a point, that is not enough to kill the deal unless it really isn’t a “deal” to begin with.
[/quote]

Quite a bit. Rates have gone up about 50 basis points in the past month. On a $500K loan the difference between 3.5 and 4.0 is 2245 to 2387. If you qualified at a maximum payment of $2250 then you’d be forced to look at houses that are priced around $470K rather than $500K to make that payment at the higher rates.

[jimmy1977]

Hi BearishGurl

Thanks for your comments, after reading through you comments I am starting to think back of the sequence of events

1. We asked for the title report immediately after our offer was accepted, We asked for it three times (me, wife and agent) they sent one after 10 days which was for another property. Makes me wonder if this was on purpose. We finally got the actual one for the property after 20 days.

2. When I called the escrow company to put my good faith money, the escrow company didn’t seem very interested.

3. When we asked the agent how many months the seller was behind, after a week or so they said 6 months.

4. When we were waiting for the loan pay off paper work. We had to send an extension, the sellers never signed and returned that document.

All these makes me wonder. Anyway I cannot fire anyone 🙂 just my issues. So I asked my real estate agent if we can keep looking at properties. I am glad to announce our offer got accepted for another property.

It has been three days, I checked the San diego county tax offices to be sure the taxes were paid – they are. The seller sent us the termite report immediately on acceptance of our offer. The escrow also sent us the title report (for the right house :)) no liens at initial glance. So went ahead and cancelled our contract with the previous house. Too bad we couldn’t get our 3.63% interest rate.

This property feels right to me, no weird liens or tax issues.

Thanks again everyone for your answers. I really appreciate the help.

—
Jimmy

[CDMA ENG]

[quote=FormerSanDiegan]We have purchased 4 houses over the years. Not a single one closed within the time frame originally agreed upon (usually 30 days). There’s always something.

I wouldn’t walk away immediately just because my loan lock expired (regardless of the length of escrow, you should have had a loan lock longer than 21 days anyway).

If the house is a good deal financially, I would try to make it work. If the rate difference between 21 days ago and now (up a bit) makes it no longer a good deal, then it was a marginal deal to begin with.

You gotta look at the big picture.[/quote]

Note worthy advice.

Thanks.

CE

[Hatfield]

If you’re not willing to fire your agent after the mishandling of the first house, you should at least ask for reimbursement of your out-of-pocket expenses arising from that fiasco, to be taken from their commission on the second house.

[CA renter]

[quote=Hatfield]If you’re not willing to fire your agent after the mishandling of the first house, you should at least ask for reimbursement of your out-of-pocket expenses arising from that fiasco, to be taken from their commission on the second house.[/quote]

Could not agree more.

…

Congratulations on the new house, Jimmy! Hope this escrow goes smoothly for you guys. Which house do you like better: the first house, or the new one?

Best of luck!

[RoyceKemp]

Jimmy, good luck with your new escrow. Reading your situation made me feel your pain. As a Realtor, I think you would have a claim for them failing to perform, allowing you to get the money back you spent performing your due diligence. In any case, 90% of the time things go smoothly, it’s those 10% of times when things go sour you really rely on your hired professionals to guide you through it. It’s tough to say if your Realtor dropped the ball on this one, but certainly things could have been done to keep you from paying anything w/o first getting some things cleared up by the seller. It’s all water under the bridge now, at least you’re better armed for your new escrow!

[jimmy1977]

Hi

I must confess I loved the backyard on the first one, but like the house on the second one. My wife was ok either way. My daughter (who is 19 months) likes the second one a lot better because she has more room to run around.

[Author]

Posts