Help with foreclosure/bank has some odd requests

11 Replies

hello, I was looking to purchase a condo here in Chicago & put an offer in and it was accepted. I heard back from my real estate agent this afternoon and I was not too thrilled at the news she gave me. She said I have to put up $1000 earnest money, simple enough - there are tenants living in the condo & according to my real estate agent if the tenant is not out at closing then the bank takes my earnest money and I am back to square one. Here is the way I am looking at things, this person living there can just not pay for rent and pretty much live rent free. The bank is telling me that there is nothing they can do but try to pay them to leave.

Does this sound right or is my real estate agent out of the loop? Regardless I had to have my offer signed and delivered today. How frustrating.

Help

When you say tenants, do you mean the previous owner? Or was it a rental that had a non-paying landlord?

".....if the tenant is not out at closing, then the bank takes my earnest money" I'm sure this is Not what you were told.  You are being told either 1) If the tenant is not out, it's your problem, and you are assuming responsibility for evicting the tenant (most likely) or, 2) If the tenant is not out, the bank will return your deposit, and the contract is void.

I am not sure if they are former owners all I know is they are renting from the bank.

I was told that if the renter is NOT out by closing then my earnest money is bye bye. The bank takes the money and that's that. My agent told me that this is typical foreclosure process

@Thomas Campbell  Thomas, see above again.  It's one of those two.  Unless You are making the offer contingent on the tenant being out, and You are not willing to close if they aren't.   The bank doesn't take your deposit and void your contract, because They can't get an occupant out.  Your agent is Not understanding something correctly.  It Is typical for the buyer to assume responsibility of removing the tenant.  If they're actually paying rent to the bank, then they are likely a hold over tenant, that may have had a valid lease.

thank you Wayne. It's time to seek a new agent, if I lost this property I will be quite upset.

Are there any agents in the southwest burbs of Chicago? Only requirement YOU MUST UNDERSTAND FORECLOSURES

thanks again

Wayne, Yes I was told the bank would keep my 1000 earnest money. I am not making this up. My dad told me to fire this agent - she's been dragging her feet lately.

Send me a PM so I can refer you a RE agent who is investor-friendly based in Chicago SW suburbs.

@Thomas Campbell - unfortunately for you, the agent you were using will want to be paid a commission, and if you change agents the new agent will also want to be paid a commission. The selling bank will only pay one of those commissions; the other will come out of your pocket. So even though you are unhappy with this agent, you should consider changing agents only if you are prepared to pay a commission out of your own pocket. I suggest you try contacting the agent's broker of record to explain your unhappiness and see what the broker suggests to appease you.

Originally posted by @Thomas Campbell :
thank you Wayne. It's time to seek a new agent, if I lost this property I will be quite upset.

Are there any agents in the southwest burbs of Chicago? Only requirement YOU MUST UNDERSTAND FORECLOSURES

thanks again

Part of the problem is you are overloading terms. You are asking for the wrong specialty if the only requirement is the agent must understand foreclosures. This property is an REO. You need someone who can interface well with Bank Owned property. Regarding the earnest money, have you read through your contract? Does it say you will lose your earnest money based on 'tenant' occupancy on the day of closing? Usually contracts are unambiguous and rather detailed about the use of and release of earnest money.

@Chris Martin has the right idea. Have your agent show you the part in the contract that says theses terms your agent is explaining.

Hi @Thomas Campbell

I have to agree with everyone else - if it's not in the contract then you'll get your EM back. It certainly doesn't sound right to me that you wouldn't.

It's more likely that the current tenant (or former owner) will be your problem if you close on the property. In that case, you should be aware that it can be relatively costly both in time and money to get a tenant out in Chicago. There are some good threads on the subject on BP.

Also, if you're buying a condo, make sure you do your due diligence on the HOA, not just the physical side of the condo.

Let us know how it all turns out

Larry

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here