Without reasonable question, banks are in charge of the current Real Estate market here in Scottsdale and the greater Phoenix area. Patently absurd low pricing of an overwhelming abundance of foreclosure and short sale listings dictates that financial institutions remain the bully of our local pulpit. While we may lament this eventuality, we certainly cannot deny it without yielding hard-earned credibility. Dominance in the marketplace, however, should not be mistaken for carte blanche to operate in a manner independent of obligation.
Consumers, and by the transitive property their chosen agents, put up with a great deal when pursuing a distressed (be it physical or financial) property. Selling institutions call the shots on the choice of title company, manufacture from afar their own addenda that often flies in the face of local custom or … gulp … law. All too aware that these catacombs house the buried Real Estate treasure they seek, buyers eagerly agree to any and all provisions the banks and their lawyers concoct. For the most part, after scrutinizing the often arcane verbiage of said addenda and verifying that an actual, legitimate escrow company has been selected to perform the title work (as opposed to some flunky sister company on the other side of the country in which the seller has a financial stake), we swallow hard on the arrogance and proceed under the bank’s terms. The values on their properties are just too good to be dissuaded by negotiable minutia.
But that’s where it ends.
Perhaps a happenstance created by a bank that has become accustomed to proffering any mandate it wishes upon a transaction, many asset managers at said institutions and the lackeys charged with listing and selling their portfolios seem to have gained the mistaken notion that they can dictate deviations from the written purchase agreement based on the whims of internal policy. Case in point, I am currently embroiled in a transaction that is going along swimmingly aside from the seller’s constant refusal to execute documents that were agreed to and made part of the original purchase contract. I have heard numerous explanations for the contractual breaches, and some of them even make sense. None of them, though, absolve the seller of their contractual obligations.
The learned attorneys who advise their clients (banks) not to sign certain documents would do well to advise their clients to address such matters at the time, if not before, the contract is negotiated. I am not an attorney, but surely they understand that unilateral, after-the-fact contract revision and/or breach is far more likely to result in litigation for their clients than the terms of the documents found to be objectionable for one reason or another.
Then again, perhaps deterrence from future litigation is not in the best financial interest of that crack legal staff.
I call on buyers and their representative agents to stand up for the rights and protections you are afforded by the purchase contracts you execute. Fear of losing the bargain of a lifetime has led too many to cow-tow to the internal policies of the banks on the other side of the country table. Yes, there are certain stipulations you must live with if you wish to purchase a bank controlled property, but at the end of the day, they are just sellers who must abide by the same rules and regulations as everyone else. Assuming you didn't forget to pack heat on your way to a bank-owned gunfight, stick to your guns and do not suffer any shirking of the selling party’s obligations or infringement upon your contractual rights lightly. And make sure you grab the glock, not the air rifle. The pea shooter of polite request will just get your hair touseled and cheeks pinched.
It's big boy time when dealing with a corporate monolith.
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As a loan officer I feel your pain. Often times the lender will make absurd demands or often times take eons to approve the most highly qualified borrower. Unfortunately, the golden rule still applies. Those with the gold make the rules or in your case, break the rules. The only way to fight this is to say "no" and walk away. Eventually they will feel the pain.
What a nice rant, Paul.
If only real estate was easy anymore. Yes, dealing with banks is not fun, yes the buyers get a good deal, and yes the sellers can walk away many times without deficiency's but it is not fun, it is stressful.
They get away with what we let them take. I am a stickler on my transactions for the rights of my clients. While we may willingly give away things during the initial negotiation, I do not allow the bank to take control of the escrow. If that means playing hardball and (legally) withholding certain forms they want completed before I get our paperwork back or escalating breaches to our legal department, I'll do it. I don't really fault the banks so much as weak-kneed agents who have allowed a culture of subserviance to permeate the market. If people give you what you want, you can't really blame an entity for taking.
Unfortunately, the selling entities could give a rip about their contractual obligations and responsibilities. The lackey's in charge of paper pushing usually can't find two ways home, much less understand the potential exposure of non-perfomance under the contract. Unfortunately, until they are called to the mat on this, it will continue. We can always hope for a big class action suit!
They do think their forms are "gold" and they can make their own rules. You are so right - give them an inch and they will take a mile until they are forced to do what's right. I don't let them get away with it - a contract is a contract whether it's their silly addendums or the p & s, but there are so many that will! I also think a lot of it is because the buyers agent don't read and understand the addendums that the banks are using either and the take it as "golden."
I've been so grateful for some of the really GOOD relationships I've had with banks, working with foreclosures, but then there are just a couple that I'd like to memo, echoing your perfect script: Dominance in the marketplace, however, should not be mistaken for carte blanche to operate in a manner independent of obligation. Megaphone? memo? aaccchhhh!
I find some REO agents can be great to work with, but the banks are unfailingly ridiculous. Probably because our market is so saturated, their asset managers are so overworked and understaffed, etc. No disclosures about the property ... we can live with that. The property to convey "as is" subject to a satisfactory inspection ... we can live with that. Addenda that contradicts and supercedes the language of our local boilerplates ... we can often live with most versions of that. Changes made or failure to live up to terms agreed upon in the contract, or their own freaking addenda for that matter? That will not be tolerated.
Thanks, Paul, for getting every out that I have wanted to scream at the top of my lungs! I have ALMOST been brought to my knees by some banks and the process of purchasing an REO is undoubtedly the worst I have ever seen. I try to avoid them if at all possible but, like you already know, there are times that you just can't. That when I take lots of "breather moments"!
80% of my sales this year have been bank-owned or short, Leesa. You simply can't get away from them in my market. Suffice it to say, if I make it to 2010 with my cranium still intact, it will be no minor miracle. I have already started talking to street lamps and park benches.
You really ought to talk to my broker..he went right to FNMA and got not only his commission but extra money for having to deal with BOA. He plays hard ball. These yahoos have to be held accountable. The paper pushers, the paper pusher's bosses, all the way up. We work hard for our clients and make all of them worry that we will be back.
I like your broker, Suzanne. My personal favorites are of the, "We don't do X," variety when the contract clearly calls for the seller to do X. In attempt to minimize their exposure, I think many of these institutions are doing the exact opposite. As lopsided as the terms of the contracts typically are in a bank-owned transaction, you wouldn't think it hard for the bank to live up to the agreed upon terms. I see avoidable lawsuits down the line.
Paul,
Like those commenting above, I feel your pain (Like you, I work in the Scottsdale-Phoenix area, too) While it would be nice to take control of my business and my life once again, the golden rule applies here, big time!) "Those with the gold rule!"
Too often, attempting to be reasonable, foresighted, and professional (and operating within legal boundries) on behalf of one's clients is met with a take-it-or-leave-it attitude. Lenders understand that in our market we need them to survive whether we like it or not, and secondly, there is someone in line ahead and behind us - so our piece of business really isn't as important as it would be to Mr. and Mrs. Seller, who are operating and negotiating in good faith, and not rewriting the rules as they go.
Like kidney and gall stones, this too shall pass....but not without a large measure of pain and sleepless nights.
As always, I enjoy your posts, comments and insights.
Paul,
Your last three posts were featured. This one should have been as well!
Mike in Tucson
I'm not gonna complain too much, Mike. My smirking mug has been put on the featured dashboard far more than fairness doctrine would dictate lately. How is life at Sunstreet? I know our mutual friend Gary Miljour recently put down roots there, as well.