Dispatch: Home buyers walk away
Peter Arrabal has been sharing his tale of trying (and trying and trying) to buy a foreclosure with girlfriend Karen Parlee. Now he presents his final -- or at least final for now -- dispatch from the home-buying front:
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We bailed out. Maybe we wimped out. We finally backed out. But no one seems to be able to help us out.
As documented last month, my girlfriend (who, as of New Year's Eve, can be called my fiancée) and I were attempting to buy a townhouse to be closer to our jobs in the D.C. area. We needed relief from our two-hour commutes from Ellicott City.
Through three months, we had submitted four offers and been rejected four times. The fifth time worked, or so it seemed.
As we closed in on settlement, we were told we would be delayed 14 to 17 weeks because of a "post-foreclosure bankruptcy."
"A routine search of Bankruptcy records revealed that the prior owner declared a post foreclosure bankruptcy," they said. We don't even know who said this, because all communications come through the selling agent and are unsigned. Mysterious? Yes. Shady? Absolutely.
We asked them to explain what that meant. What was a post-foreclosure bankruptcy, and what are the repercussions for us and the bank?
"Please inform the purchasers that a routine search of Bankruptcy records revealed that the prior owner declared a post foreclosure bankruptcy," they said. Nothing else.
A few weeks later, the selling agent warned our agent that we had to submit an extension addendum to the contract, because otherwise, the contract would expire on Dec. 11, 2009, and the sellers could walk away with our deposit because we failed to close on time.
Yes, it was our responsibility to extend the contract despite the fact that Wells Fargo didn't own the house they had listed for sale.
We offered to extend the contract for 14 weeks.
Denied.
"It is our policy not to extend contracts more than three weeks at a time," the e-mail said.
Really? Every three weeks I have to offer to extend the contract, on the hopes that your lawyers manage to clean up this mess?
Enough. We could only put up with their shenanigans for so long. We could only commute two hours each way for so many weeks. Our patience and spirits were worn thin.
And so we bailed out. We drew up a withdrawal from the contract and requested our earnest money deposit back. The original contract called for a $6,280 subsidy from the seller to cover closing costs, which included a home inspection and appraisal, for which we had already paid nearly $1,000. In the withdrawal addendum, we requested reimbursement for those two items.
We got a check in the mail for the earnest money deposit. It may as well have come with a picture of someone's middle finger regarding the inspection and appraisal request. They never rejected that request, they just ignored it completely.
What did we have to show for five months of trying to "realize the American dream of homeownership," as those National Association of Realtors radio spots inspire? A handful of wasted weekends, a few reams of wasted paper, a negative balance of $475 on an inspection and $501 on an appraisal. And we still had that two-hour commute.
If insanity is truly to do the same thing repeatedly expecting different results, then we are 99 percent insane.
Driven by the other 1 percent, we just signed a lease on an apartment in Bethesda, located five minutes away from my work. There were no mountains of paperwork, no waiting, no loan officers. I signed my name a handful of times, wrote a check, and got a pair of keys to my new home.
What did we learn?
1) People trying to buy a foreclosed home face significantly more potential pitfalls than with regular sales.
2) The banks who own these home are often incompetent, irrational and difficult to deal with.
3) This kind of stuff makes absolutely no sense to the normal, rational person. However, when presented to a lawyer or real estate agent, this scenario somehow makes perfect sense.
4) The lawyers always, always get paid.
5) There is not a single incentive that could convince me to ever consider using Wells Fargo in any capacity.
I feel very bad for the agent who tried to help us with this. She worked from August through December trying to help us buy our first home, and ended up collecting no commission, through no fault of her own.
So, for the next year, we'll be paying a monthly rent that's more than what our mortgage payment would have been. There are no for-sale properties on the market right now that meet our criteria, so we'll wait for the spring/summer/fall inventory to come back and bring us some options. (Apparently, no one wants to move during the winter.)
"A routine search of Bankruptcy records revealed that the prior owner declared a post foreclosure bankruptcy," they said. We don't even know who said this, because all communications come through the selling agent and are unsigned. Mysterious? Yes. Shady? Absolutely.
We asked them to explain what that meant. What was a post-foreclosure bankruptcy, and what are the repercussions for us and the bank?
"Please inform the purchasers that a routine search of Bankruptcy records revealed that the prior owner declared a post foreclosure bankruptcy," they said. Nothing else.
A few weeks later, the selling agent warned our agent that we had to submit an extension addendum to the contract, because otherwise, the contract would expire on Dec. 11, 2009, and the sellers could walk away with our deposit because we failed to close on time.
Yes, it was our responsibility to extend the contract despite the fact that Wells Fargo didn't own the house they had listed for sale.
We offered to extend the contract for 14 weeks.
Denied.
"It is our policy not to extend contracts more than three weeks at a time," the e-mail said.
Really? Every three weeks I have to offer to extend the contract, on the hopes that your lawyers manage to clean up this mess?
Enough. We could only put up with their shenanigans for so long. We could only commute two hours each way for so many weeks. Our patience and spirits were worn thin.
And so we bailed out. We drew up a withdrawal from the contract and requested our earnest money deposit back. The original contract called for a $6,280 subsidy from the seller to cover closing costs, which included a home inspection and appraisal, for which we had already paid nearly $1,000. In the withdrawal addendum, we requested reimbursement for those two items.
We got a check in the mail for the earnest money deposit. It may as well have come with a picture of someone's middle finger regarding the inspection and appraisal request. They never rejected that request, they just ignored it completely.
What did we have to show for five months of trying to "realize the American dream of homeownership," as those National Association of Realtors radio spots inspire? A handful of wasted weekends, a few reams of wasted paper, a negative balance of $475 on an inspection and $501 on an appraisal. And we still had that two-hour commute.
If insanity is truly to do the same thing repeatedly expecting different results, then we are 99 percent insane.
Driven by the other 1 percent, we just signed a lease on an apartment in Bethesda, located five minutes away from my work. There were no mountains of paperwork, no waiting, no loan officers. I signed my name a handful of times, wrote a check, and got a pair of keys to my new home.
What did we learn?
1) People trying to buy a foreclosed home face significantly more potential pitfalls than with regular sales.
2) The banks who own these home are often incompetent, irrational and difficult to deal with.
3) This kind of stuff makes absolutely no sense to the normal, rational person. However, when presented to a lawyer or real estate agent, this scenario somehow makes perfect sense.
4) The lawyers always, always get paid.
5) There is not a single incentive that could convince me to ever consider using Wells Fargo in any capacity.
I feel very bad for the agent who tried to help us with this. She worked from August through December trying to help us buy our first home, and ended up collecting no commission, through no fault of her own.
So, for the next year, we'll be paying a monthly rent that's more than what our mortgage payment would have been. There are no for-sale properties on the market right now that meet our criteria, so we'll wait for the spring/summer/fall inventory to come back and bring us some options. (Apparently, no one wants to move during the winter.)
Hopefully, the next sellers we try to deal with will actually own the home they list for sale.
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Thanks so much, Peter, for sharing your story of frustration. Much better luck to you on your next go-round with the housing market.
Stay tuned for another prospective home buyer's dispatch. If you'd like to share your own experience of buying, selling or renting, email me at jamie.smith.hopkins(at)baltsun.com. (And no, it doesn't have to be a can-you-believe-this situation.)
Posted by Jamie Smith Hopkins at 7:00 AM | Permalink
| Comments (8)
Categories: Dispatches, Housing market experiences
Categories: Dispatches, Housing market experiences
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Comments
Kudos to you for staying loyal to your hardworking Realtor! In the meantime, don't pull up any of those rent-or-own comparisons to dwell on, and keep your chins up - somehow, these logistical messes have to get cleared up, so that qualified and motivated buyers CAN make home purchases!
Best regards, Gretchen
Posted by: Gretchen Conley | January 11, 2010 8:21 AM
Glad you got your earnest money back. Don't feel too slighted that the inspection and appraiser fees were a sunk cost... it's pretty much an 'investment'/risk you take going into the home buying world.
I paid $400 bucks for an inspection that showed major damage that the owners had 'forgotten' to mention. Damage was severe enough we backed out. We weren't able to get that money back but, as far as I was concerned, that was the best $400 I ever spent.
That was 18 months ago, I still haven't found a home but, that's okay. The world seems too unstable nowadays to make a 5+ year commitment....
Anyways, keep up the good work... and renting ain't so bad - a lot less to worry about on the day-to-day.
Posted by: Nick T. | January 11, 2010 10:29 AM
Wow, what a circus show. I have to wonder if the real estate business is doing irreparable harm to itself by generating so many horror stories like this.
Reading this story makes me glad I bailed after my first negative encounter with a short sale. People like to dump on the new home builders, but I found working with them to be much closer to the experience I was expecting. I can sympathize with the long commute! 5 minutes from work is definitely going to give this person more free time and less stress. There are certain advantages to renting anyway. Most people tend to ignore the easy mobility advantage in particular. Don't like your neighbors? Don't like the location? Neighborhood going downhill? Move! No mountain of paperwork or dozens of "professionals" telling you what to do.
Posted by: BigDragon | January 11, 2010 11:42 AM
Peter, thanks for sharing! I think you should sue the bank for your other expenses. I personally will make sure to avoid any dealings with Wells Fargo (never liked them anyway).
Just a strangest thing. On one hand, everyone complains about the large number of foreclosures. On the other - try buying one and might end up like Peter. Something is broken here...
Posted by: Jelena | January 11, 2010 2:22 PM
Big Dragon makes a VERY valid point.
The LISTING agents and FULL disclosure are where the problems are.
They need to vet these contracts and perhaps score them based on how ready and able the "owner" is to close a deal.
Based on the anecdotes it would appear that maybe one in ten (twenty?) of these is really ready (willing?) to sell. Te others are just wasting the time and energy of every (non investor) buyer.
Posted by: MrRational | January 11, 2010 4:12 PM
Thanks for the comments + support.
As cheesy as this sounds, it started to feel like someone was trying to tell us that it just isn't the right time to buy. Loving the new place so far! Rent isn't so bad when they give you a free month for being crazy enough to move during the winter!
Posted by: Peter Arrabal | January 12, 2010 4:13 AM
The realtor earned what was deserved. No deal, no coin. Makes up for all of those years where they were, per hour of actual work, grossly overpaid.
Agree that the lawyers always get paid. Fox henhouse analogy persists, and Shakespeare was never more correct.
Sounds like your rental is a winner. Thank your guardian angel!
Posted by: Darwin Rules | January 12, 2010 6:23 AM
I went thru this same thing buying a foreclosed home. Took me 5 months, but I got it, and I stole it from the bank.. literally; but legally. Persistence pays but you have to be smart. After the initial repeated rejections I hired a lawyer and a staff member to "push" on the banks involved.. actually two (one for the initial loan and another for the home equity on the title). So yes, lawyers always get paid, but if you pay a little extra to a lawyer or a title company that WORKS FOR YOU, believe me they will go the distance. Hmm, I'd say the lawyer's staff called about every working day of those three months and really persisted to get my contract thru, and it paid off. The cost of the services really paid off, I got the house, at incredible discount, so hiring the lawyer was a great idea.
Remember, squeaky wheels get the grease, and sometimes you may need some help to squeak the loudest. Try, try again. It was a real feeling of accomplishment to completely rip the bank off, so when I hear stories like yours I really feel for you, I went thru the same thing until i got smart.
Try again.. persistence pays !
Posted by: Persistent Peter | January 12, 2010 9:07 AM