I had a wake-up call last week while getting things together for the purchase of our first REO property. The list of addendum included liabilities to the tune of $100 per day if we don't close on the specified date. But what surprised me the most was there was no quid pro quo. The bank could be as late as they wanted to closing and they experienced no ramifications at all.
When I balked at the notion that I should pay a per deim, my agent talked to the other agent. He said that we were only $500 higher than the next highest bidder. Which reading between the lines you can see what that meant.
In a recent post on Activerain.com an agent posted a blog about a sellers use of the property after the sale. According to the "Arms Length Transaction Notice" that both seller and buyer had to sign on a short sale, the bank was forcing the parties to say they will never let the seller rent or buy the property.
Now, I understand that the seller could be trying to get out from under the house just to buy it again, but who cares? If the bank got a fair price for it, then why do they give a crap what happens to it afterward? It seems a bit draconian of them to insist that the people who know the most about the house, want to keep their kids in the same school and have made connections in the neighborhood to have no recourse to stay. This is not good for neighborhoods, communities and the country in general. Having to move in the middle of job loss is a recipe for dysfunction, which will be carried onto the taxpayers who are still working by way of new housing assistance, welfare payments and other subsidies.
We who are in the real estate business need to call these REO sellers to account. What is happening is not good for the industry either. How much more time are you spending on deals because of increased paperwork and time affiliated with these transactions? How much liability are you as an agent opening yourself up to with all these fine print addendum and notices? I say Fannie and Freddie need a refresher economics course in free market society. All this red tape is raising some red flags and I'm beginning to smell something funny, and it's not just the stench of a stuffy vacant property.