I have purchased 4 properties that I rent out and have been OBSESSED with BiggerPockets podcasts, forums, audiobooks, and have non-stop been studying investing and trying to learn and become as knowledgeable as possible. I feel extremely confident at this point after extensive research and my experience so far.
I went to buy another home, and used a friend that is a realtor after my other realtor had no time to show properties and I was on a timeline. Everything was fine, except for the fact I found every single property I wanted to see and ran my numbers. She did no work besides show me the properties once I found them and requested to see them.
I found a foreclosure near my current location on hudstore. My realtor had never done a HUD property, so I was very worried. She did not even know you needed a number to place an offer. She told me she didn't need up but ended up saying I was right after speaking with her broker, who has their number...red flag #1
Then she told me there were multiple bids on the property and that I needed to place an offer over asking. They asked $260 and we bid $270 and had our offer accepted. I immediately thought "how would she know there are other offers. It's HUD, not like a regular property where the realtor will tell you. $10k over asking, what was I thinking?...red flag #2
Then I did MY RESEARCH (which is her job, especially since it's her first HUD experience she should have run everything by her broker and made sure to know what she was doing) and found out that HUD will pay up to 5% of closing costs. I let her know and she said that's not true, but still emailed the agent about it....red flag #3
I followed up asking if she had heard from the agent. She told me to send her where I read that information so I sent it over. She then let me know that we would have had to request the 5% towards closing with our offer. I SAID, "SO YOU ARE TELLING ME THAT NOW WE HAVE TO PAY ALL CLOSING COSTS WHEN THEY WOULD HAVE BECAUSE WE DIDN'T REQUEST IT?!?!" Her response was yes.
I told her that was over $12k!!! She responded, "yeah HUD and the government suck. Sorry"
We then got into it back and forth (professionally) and I asked how she was going to fix the situation. She blamed me and HUD and that how was she supposed to know that.
Finally, I asked to back out of the deal and she said we couldn't, even though I never signed an executed contract.
I took a screen shot of the As-Is contract that I did sign, which stated we had 9 days during the inspection period to back out, and her response was "I don't need a screen shot. I know what an As-Is contract says, but HUD is different" Um, what?! I said, "It's in the HUD As-Is Contract what are you talking about?"
Finally, she said they had sent an email saying if we didn't sign the contract by tomorrow morning I would lose my escrow. I had to tell her their email isn't binding and means nothing. It's not signed or agreed and then finally she contacted them and they said we could cancel so she is drawing up the paperwork.
So I lost a great deal because my realtor literally knew less than me and did not protect me.
Once the property is relisted, can I put in another offer with a new realtor (my friend that does title says that won't fly) Or could I have someone else purchase it for me?
Any advice, comments, suggestions for the future?
Thanks for listening!
