Realtor screwed up my check

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Realtor screwed up my check

Domonique Hudson
Real Estate Lender · Los Angeles, CA · Member since 2014 · 20 posts · 3 votes

Hi Guys/Gals,

I have a wholesale deal in place on a bank reo. I got the property under contract at $54,500 and I'm going to wholesale it to my end buyer for 59k all cash using a simultaneous close. My escrow company has no problem doing the simultaneous close and neither does the banks escrow company as long as I pay the owners title policy. Slam dunk right? NOPE. Read below  the email the listing agent sent me as to why I can't do the simultaneous close.

Email: *The issue is not seasoning. The issue is that the original agreement was as-is, cash, non-contingent sale. You provided a proof of funds from one source, and now you want to change the source of your funds to have them come from the proceeds of another sale. In essence, you are making the sale contingent on the close of the other sale. The original agreement also says closing for the seller, at least, will take place at their designated closing company. You are now trying to change that part of the agreement also and have them close with another company they did not choose.*

So that's the email she sent me. She obviously has no idea what a simultaneous close is and that the deal is still going to be all cash, as- is, no contingency. But I'm tired of going back and forward with her about this deal. My agent is so passive that I have to defend myself with the listing agent ..Smh..So Now to close this deal I have to do a double close which is about to eat away at the profits. Talk about a bummer..Anyway, I'll just be happy to close this deal and I've sworn to never buy from that listing agent or her company ever again....

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
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@Account Closed The bank purchase addendums specifically tell you that you can Not assign the purchase contract (without their permission, which they won't grant), period.  Doesn't matter what irrelevant language you put in your purchase contract.  Also, the banks don't accept "options to purchase", they execute purchase contracts along with their addendum which supersedes all locally used contracts, so that's an irrelevant idea.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Ned Carey 

      not sure about your state but our state the law is title company is negotiable just like anything else in the contract.  In practice your buying a property undermarket and will do whatever the seller wants so you can make your spread.

    In CA title co handle these transactions and threats to them are pointless.. same with the agent. what this buyer needs to do is tighten up what he does.

    As many have stated.. If you say you closing with CASH you need to have the cash not funds from another transaction... ETc etc.  BAnks are pretty firm on all of this.. I know I deal with it 2 to 5 times week with my closings and trying to figure out who the seller is and if I can change things because its an individual or if its fannie or bank and I know it goes there way or the hwy

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
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    Originally posted by @K. Marie Poe:

    You DO have a contingency, as your end buyer's funds must show up in escrow before your closing can happen. My escrow company requires that such a contingency be disclosed to both the buyer and seller.  And they call it a contingency because it is.

    Yes but that is semantics. We are assuming the deal doesn't  close if the end buyer does not show up. In the English language you can say the deal is contingent on that happening. However the CONTRACT is not contingent on that happening. That is no different than saying the deal is contingent on the original buyer showing up with the cash. It is also the same as saying the deal is contingent on the bank showing up and signing the deed. 

    But contractually all this is irrelevant. If the end seller doesn't show up, the OP would be in default. However that does not change the sellers obligation to sell if he does show up.. A true contingency would mean if he or the end buyer do not show up, they are not in default and would get his deposit back. 

    Exactly which make me wonder why she is trying to torpedo this deal.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    The agent is not doing this their own....neither from the reason of having a higher offer/making a better commission, which is what most agent haters want to accuse them of first, Nor because she's being righteous or jealous......it's marching orders from the lender/asset manager. She's just the messenger. Right or wrong, when a lender realizes their REO or Short Sale transaction is being double closed/wholesaled for a profit, they know they didn't get top dollar, and they want to prevent that....pure and simple. Had the OP selected to use his own title company from the beginning, this would have all been avoided. But, the OP wants to change title co.s now, since his title co. Won't send the funds to the bank's title co. bEcause the OP doesn't hold title.

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  • Dell Schlabach
    Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    11y

    Having wholesaled many bank owned houses, I'll just reiterate what @Wayne Brooks and @Mark Ferguson are saying. 

    It is very difficult to make any changes to the contract after initial acceptance of offer, although last week I was able to get bank to agree to add another party to the deed, before addendums were signed. After addendums are signed, making any changes have been impossible for me, with bank owned.

    However as previously stated, all the banks in my experience will let the buyer choose the title company, but buyer pays his own title insurance and fees as others have mentioned. 

    Bank owned properties that we are planning on wholesaling we now use our own title company, and pay the extra fees. Our Title co will do the title search, not charge title fees on the first transaction, only charge title insurance/fees to our buyer saves a little money, and our buyer pays the fees.

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  • Dell Schlabach
    Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    11y

    @Marvin S.  We are not ignoring the second sentence, it clearly states the Seller MAY assign at ITS sole discretion, WITHOUT PRIOR NOTICE OR CONSENT OF THE PURCHASER. 

    DO you interpet that to mean, the bank is likely to let YOU assign the contract and profit. Not in the real world. 

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

    The purchaser shall not assign this Agreement without the express written consent of the Seller.

    The Seller may assign this Agreement at its sole discretion without prior notice to, or consent of, the Purchaser."

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

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  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    11y

    I may have forgotten to mention I am an REO agent. I list reos for 35 banks and hud, VA etc. I am also a real estate investor. If I would have the listing agent the exact same thing would happen because the seller, not me would have caught this because the closing company is not the same as the contrac. The seller uses the same closing companies on all their transactions. If another title company sends figures to the seller the seller will stop everything right there. Huge red flags. It's not the agent stopping.

    For you guys thinking the agent is mad because they are making less what a joke. 

    1. REO agents make money on volume not one deal. It ridiculous to think they are killing the deal because they are making less money. They aren't the selleR. They make the same amount whether sold to the op or another buyer. They don't care if they have a higher offer, they aren't the seller. They may make $20 bucks more with a higher offer, but it would take a month to get it And hours more of work. They want to close properties fast with the least amount of work.

    2. REO agents are graded on closing times and getting houses sold the first time. Intentionally killing the deal would make them look horrible to the REO seller and may get them fired. This reiterates it is the sellers decision not the agent.

    3. Banks don't like wholesalers. not because they don't like investors, because wholesalers fall out of contract more than any other buyer. That's why you can't assign reos. It is very clear in the contract the buyer cannot assign the contract and no fancy words will change that. If a bank sees a wholesaler trying to pull a fast one on them with a bogus cash offer or or unauthorized simultaneous close they will halt everything. 

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  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    11y
    Originally posted by @Account Closed:

    By the way, the agent/owner was the HUD listing agent. I'm like hmmmm

    If it was a hud deal the agent can't buy the home as a hud listing. Neither can anyone in their office. All bids are submitted on the hud website and the agent has no influence on any of them nor sees any of them, unless the agent submits a bid for their own buyer.  Whatever the case that has nothing to do with the assignment clause. You can't assign hud.  

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  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    11y
    Originally posted by @Account Closed:

    @Mark Ferguson

    "If it was a hud deal the agent can't buy the home as a hud listing. Neither can anyone in their office." 

     Mark, that may be the truth.  

    However, Hud has a sequence for purchasing, easily circumvented when a buyer uses the listing broker as the buying agent as well. The listing agency gets $1250 -$2500 depending on the market in the area upon a sale? I don't remember, as I moved on from the scenario I mentioned. But I have seen properties on the HUD Home Store go thru the process and end up being listed by owner/agents that were the lister's for HUD. That is irrefutable. How? I don't care. If the second sentence is a leverage so be it. But the first sentence may permit assignment of the agreement, and agents, etc., are simply wrong in saying that it can't be done. The instructions are simply stated in the paragraph. Ask for written permission-- the listing entity is not the final arbiter, other than holding on to the fiction it can't be done. The addendum implies it can be done if asked.

    The property that i spoke on..... What I do remember is that it was subsequently listed for $62,900 for close to a year. No work done on it. The same broker that had it listed during the HUD steps was also subsequently the owner as I saw via public records. What I did'nt say is, she purchased it for $3K less that my offer with HML. So I just said hmmmmm!

    Insofar as the complete paragraph 27,  my hmmmn moment made me read it completely and the following pargraphs.  Nothing in the addendum supercedes local law until it is contrary to the provisions of the addendum.  Only then does the terms of the addendum supercede as stated in paragraph 28.  The one that is all capitol letters and bold face, starting with " EFECT OF ADDENDUM:"

    The subject of this original post, IMO, arose from a lack of effective communication between licensed offices and their officers.  Agents that are investors have a plethora of tools when thinking as investors.  

    You may be right. I can't assign HUD.

    But with an astute agent, the right scenario, I can ask in writing thru my buyer's agent.  The provision is there.

     There is no sequence for getting around the hud bidding system. The agents have nothing to do with it. A listing broker sees the exact same thing a buyer agent sees when submitting bids. I am a hud listing broker. I have no influence over bids. You can ask for anything you want. Hud won't sign anything except their own documents they generate And no additional comments can be written in. 

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  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    11y
    Originally posted by @Account Closed:

    @Mark Ferguson

    "There is no sequence for getting around the hud bidding system. The agents have nothing to do with it. A listing broker sees the exact same thing a buyer agent sees when submitting bids. I am a hud listing broker. I have no influence over bids. You can ask for anything you want. Hud won't sign anything except their own documents they generate" 

    Mark, I apologize, the "sequence for purchasing" I mentioned. I was refering to HUD's bidding system. Forgot the actual terminology.

    Further, I in now way implied agents have anything to do with the bidding system,  that they see anything other than what the public sees,  nor do they have any influence over the bids,  other than submitting them in the time frame required for submission.  If memory serves me right, this time frame is also posted on their site? I have never read their entire site, just how to purchase inventory.  So their is a great deal I don't know about, and when the time comes again I will trust who they trust to effect the deals.

    However,  your last sentences:  "Hud won't sign anything except their own documents they generate And no additional comments can be written in." Are you saying that NFDC FORM 001's paragraph 38- Additional Terms or Conditions is just ink?  The answers are already written Mark.

    I understand that any attempt to utilize the terms of paragraph 27's first sentence may be a futile attempt.  But that opportunity exists, and no agent has the authority to prevent a prospective buyer from utilizing it.  Until that provision is struck from the document-- that opportunity is there. And maybe more so doable providing the local laws are met.

    Insofar as my other hud posts go. Well, some folks are and act with integrity,  etc.  Some don't.  Licensed or not. I kinda hate I revisited that episode.

    I think you are confusing Fannie Mae with HUD. There are no additional provisions, no state contracts and no state disclosures or addendums, amends etc signed by HUD.

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  • Domonique Hudson
    OP
    Real Estate Lender · Los Angeles, CA · Member since 2014 · 20 posts · 3 votes
    11y

    @Mark Ferguson 

    In my contract I stated that I chose to use my own title company as by that states law I was given the option, I would simply have to just pay the owners policy. Myself and the bank have already signed all the paper work necessary to close the deal. Both sides titles company gave us the green light with the simultaneous close. The listing agent I believe just isn't familiar with a simultaneous close. She thinks that I'm going to be closing the B-C transaction first and that the funds aren't cash. After explaining to her thoroughly the process and that I was still paying cash she said she believes its fraud. My agent who submitted the deal for me agrees the listing agent is wrong, but my agent just wants a check so she doesn't care how I close. I contacted an attorney and he advised me to take her to small claims court. Since I'm in California and the deal is in Missouri I don't even think its worth it but I'm definitely going to file a complaint with the board. My lesson out of all this and this is just for my own sanity I'LL BE STICKING TO OFF MARKET DEALS FROM NOW ON....

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  • Sean Brooks
    Bear, DE · Member since 2014 · 178 posts · 65 votes
    11y

    @Domonique Hudson 

    What is this the state law regarding this type of closing? 

    It sounds like you did not view the contract specified by the bank. Not I do not know the law in Missouri but when you're dealing with a real estate agent the difference between you and that person is they studied and continue to train in the most important part of Real Estate which is not focused on by investors and that is the law portion. Hopefully they have their own council in the office and she checked with the in house lawyer. I know when I need clarification I run it across them to make sure I'm in compliance.

    Most banks will specify in their contract not to allow what your trying to do.  So if you produce a proof of funds letter that you must purchase go to closing with no changes to the purchaser.  Do you know the law in Missouri?

    First from the banks perspective it looks like something shading is occurring. Second they can sell the property to the third party for more money during the initial sale. Why would they pay a realtor and have you profit from their sale? The reason why a Realtor is used in the first place is because of the knowledge of the state laws, contracts, and best sale price. The listing agent job is to protect and advise the seller.

    And remember your dealing with a lawyer and maybe more than one depending on your state law. Question: When you produced the proof of funds letter did you reveal then that someone else was going to be purchase the property?

    Some of this was changed because of anti-terrorism laws too.

    @Wayne Brooks 

     explain it correctly.

    The realtor did not screw your check up but you did not understand. The key word in this line is "change". You agreed to the contract stating your purchasing the property as-is, for cash, with a non-contingency. Lawyers write these contracts and only way changes are made is through an addendum.

    To solve the issue talk to the party that gave you the funds letter. Ask can you buy and then sell to them for the additional money. Then once you build up your cash you'll be able to produce the letter, purchase and then resell. But when you do so to a mortgage buyer it'll be a wait period before the property can be purchased with an FHA loan.

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  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    11y
    Originally posted by @Domonique Hudson:

    @Mark Ferguson 

    In my contract I stated that I chose to use my own title company as by that states law I was given the option, I would simply have to just pay the owners policy. Myself and the bank have already signed all the paper work necessary to close the deal. Both sides titles company gave us the green light with the simultaneous close. The listing agent I believe just isn't familiar with a simultaneous close. She thinks that I'm going to be closing the B-C transaction first and that the funds aren't cash. After explaining to her thoroughly the process and that I was still paying cash she said she believes its fraud. My agent who submitted the deal for me agrees the listing agent is wrong, but my agent just wants a check so she doesn't care how I close. I contacted an attorney and he advised me to take her to small claims court. Since I'm in California and the deal is in Missouri I don't even think its worth it but I'm definitely going to file a complaint with the board. My lesson out of all this and this is just for my own sanity I'LL BE STICKING TO OFF MARKET DEALS FROM NOW ON....

     Well, in that case ignore most of what I said. lol. Is the other agent the broker owner? You can have your agent talk to her broker if she is not. I would ask for the email from the seller who is saying you can't do this. If she hesitates ask her to mark out all contact info for the seller. If she is doing all this on her own, then it is a issue with her nd she probably just does not understand like you said. 

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    11y
    Originally posted by @Wayne Brooks:

    The agent is not doing this their own....neither from the reason of having a higher offer/making a better commission, which is what most agent haters want to accuse them of first, Nor because she's being righteous or jealous......it's marching orders from the lender/asset manager. She's just the messenger. Right or wrong, when a lender realizes their REO or Short Sale transaction is being double closed/wholesaled for a profit, they know they didn't get top dollar, and they want to prevent that....pure and simple. Had the OP selected to use his own title company from the beginning, this would have all been avoided. But, the OP wants to change title co.s now, since his title co. Won't send the funds to the bank's title co. bEcause the OP doesn't hold title.

    I missed that the property being wholesaled was an REO. That's a whole different world and one I stay away from. I got banged up on an REO resale deal in 2003 and haven't gone near one since.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    I have to doubt the "I chose to use/pay for my own escrow co. in the contract".  If this were truly the case, there wouldn't be 2 "escrow co.s" involved.

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  • Domonique Hudson
    OP
    Real Estate Lender · Los Angeles, CA · Member since 2014 · 20 posts · 3 votes
    11y

    @Wayne Brooks A lot of times investors choose to use their own escrow companies because they do repeat business with them so they feel more comfortable with them and the title companies are more familiar with how the investors like their deals structured...Each state is different but in Missouri they give the buyer the option to use their own title co

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    @Domonique Hudson Agreed, I always recommend buyers use their own title co.s, especially with REO's even having to pay for the title insurance. But had you chose to use your own title co. in the purchase agreement, their title wouldn't be involved.

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  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    11y
    Originally posted by @Wayne Brooks:

    @Domonique Hudson Agreed, I always recommend buyers use their own title co.s, especially with REO's even having to pay for the title insurance. But had you chose to use your own title co. in the purchase agreement, their title wouldn't be involved.

    I'm not sure on this Wayne. I bought a Fannie REO last year and after that headache I swore never to use their title again. My Mom just closed one 3 mo back and chose her own title, and I could be mistaken but I'm 90% sure that Fannie still had their title involved (to do all the seller's doc's I assume). I'd have to check to be sure but I remember 3-4 delays in closing and they were all from the seller's title company.

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  • Domonique Hudson
    OP
    Real Estate Lender · Los Angeles, CA · Member since 2014 · 20 posts · 3 votes
    11y

    @Wayne Brooks Yeah Wayne I believe you may be right man about mentioning using my own title company up front.... This deal has been such a head ache from the start I possible looked right over it but I thought I made it clear to my agent from the get go...But hey I'm a team player so I'll take the blame because its my deal and I should have caught it...I think I'm going to stick to off market properties from now on though, motivated sellers are way easier to deal with... 

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