WTHeck!!!

[namvet]

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@StartingOver10 wrote:

Actually - not only is that practice extremely weird, it is not allowed.

I bet the bank doesn't even know that the investor is going to rent back to the current owner of the house. In the new Arm's Length Transactions affidavits that type of activity is specifically prohibited. Even in the previous versions of the Arm's Length Transaction Affidavit and Short Sale Addendum there were to be no "side deals" with the seller for occupancy after closing. In the most recent version last month (BOA's comes to mind), this is the exact wording on section 4 of the Short Sale (mandatory) Addendum:

The Parties acknowledge and agree that neither the Buyers, or Sellers, nor their respective Brokers/Agents have any agreements written or oral that will permit the Seller or the Seller’s family member to remain in the property as renters or regain ownership of said property at any time after the execution of the Short Sale transaction. This includes if the seller is retaining a direct or indirect ownership or possessory interest in the property, and/or have a formal or informal option to obtain such as interest in the future.

So, it is completely out of line for those properties to be held aside for investors so the seller can remain in the property.

Having said that, there are properties that can be purchased cash only due to the condition of the properties. No bank will finance the properties in its current condition for homes that are in poor condition. Sometimes you can do a 203k loan on those type of properties, but not always. There may not be enough time left before the f/c sale date for the short sale to be negotiated and the 203k to be issued without an extension. (The judges in our area won't allow the extensions at the moment - long story behind this.) 

In short, I bet if the bank knew what was going on - that short sale would be turned down. The whole idea is to get the homes into the hands of a homeowner for a primary residence and to stabilize the neighborhood. There is a time and place for rehab investors, but not to rent to the previous owner. The investor comes in and repairs the property to either sell on the open market or rent it, but to another person - not the current owner.

+1  the realtor is correct!

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[tubesock]

Now that I'm thinking really hard into my situation...I'm thinking that the wool has been pulled over my head. 

I call the agent to put a contract on the home. She calls me back and takes all my information and says that she will email me the contract to be signed and instructions on what we need to do so that she can put the contract thru. Then I get a voicemail from her saying they are only taking offers from investors. So, in actuality, no offer is never made.

She obviously talked to someone in the office and they told her that they are only excepting offers from investors.

(LIGHTBULB) It's not the bank, it's the listing company that's only accepting offers from investors only!!!

I'm feeling really angry now

[JenniferinFL]

Remember though, with a short sale the owners have to sign on it. That may be what they have specified to the listing agent. A distressed property isn't necessarily one that has undergone some sort of physical damage, a distressed property indicates a property that is pending foreclosure. I've also seen the term used in connection with a home that is no longer worth what was paid for it. That also has nothing to do with the condition of the property.

Your realtor doesn't sound like much of a go-getter. Ours was sending us listings on a daily basis for homes she felt looked like what we were shopping for. She contacted us when she saw things coming up for sale at her office that were our style and got us in to see them the day they were officially listed. If your realtor isn't suggesting other properties and is just letting things slide, then just get a new realtor. When we were first looking for a home a couple years ago, she got us in to see a homepath home listed well below market value. The listing agent said it was going to be a cash deal only for investors, but, we'd already walked through it and the home was definitely in good enough condition to finance. Our agent called the listing agent on her discrepencies as she was obligated to offer the home first to owner occupants. House passed inspection with flying colors, deal still fell through as my husband got laid off a couple days before closing and the investor got the house to flip anyways, but, we did get to sign on it only because of our realtor threatening to report the other agents practices. Real estate is still profitable, you need a better agent if your going to get in to see and sign on the good deals. When we started our house hunt again last year we had lost her number and ended up with another realtor that folded like a house of cards whenever the listing agent said she thought she had a cash offer coming in. We missed out on a couple homepath homes that were supposed to be owner occupant first preference due to his blundering. I would find a new realtor outside of that office, have them inquire about that house and see if you get the same answer.

[tubesock]

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@JenniferinFL wrote:

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Thanks for sharing your experience Jennifer! 

I decided to talk to a relative who is a Real Estate agent in California. She said that the Arm's Length didn't apply to this particular case and that since the home is not in Foreclosure the Homeowner's had a right to deny or except any offers, under any conditions at their discretion. Of course, I didn't want to hear that. 

She said that it's not the bank's, until it goes into foreclosure.

I guess this makes sense...

[StartingOver10]

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@tubesock wrote:

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@JenniferinFL wrote:

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Thanks for sharing your experience Jennifer! 

I decided to talk to a relative who is a Real Estate agent in California. She said that the Arm's Length didn't apply to this particular case and that since the home is not in Foreclosure the Homeowner's had a right to deny or except any offers, under any conditions at their discretion. Of course, I didn't want to hear that. 

She said that it's not the bank's, until it goes into foreclosure.

I guess this makes sense...

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Didn't you say that the property was a short sale listing?  If so, then the short sale addendum and arms length addendum certainly do apply. If it is NOT a short sale, then naturally the seller can choose his buyer and it can be an investor.

HOWEVER, if it is a short sale, then the addenda above as specified must be added to the contract. Your relative is right about the bank not owning the home - but they don't have to approve the short sale if the buyer is an "insider" renting to the previous owner.  In fact, because the seller is asking the bank to take a hit, the bank can decide to accept it or not. One of the conditions that the bank (really the banks investor) has for acceptance is the arms length transaction and the fact that the seller doesn't possess in any way the property after closing (as posted previously).  Not all real estate agents are familiar with short sales, even in this market.

I agree with Jennifer - find another agent.

[tubesock]

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@StartingOver10 wrote:

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@tubesock wrote:

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@JenniferinFL wrote:

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Thanks for sharing your experience Jennifer! 

I decided to talk to a relative who is a Real Estate agent in California. She said that the Arm's Length didn't apply to this particular case and that since the home is not in Foreclosure the Homeowner's had a right to deny or except any offers, under any conditions at their discretion. Of course, I didn't want to hear that. 

She said that it's not the bank's, until it goes into foreclosure.

I guess this makes sense...

---

Didn't you say that the property was a short sale listing?  If so, then the short sale addendum and arms length addendum certainly do apply. If it is NOT a short sale, then naturally the seller can choose his buyer and it can be an investor.

HOWEVER, if it is a short sale, then the addenda above as specified must be added to the contract. Your relative is right about the bank not owning the home - but they don't have to approve the short sale if the buyer is an "insider" renting to the previous owner.  In fact, because the seller is asking the bank to take a hit, the bank can decide to accept it or not. One of the conditions that the bank (really the banks investor) has for acceptance is the arms length transaction and the fact that the seller doesn't possess in any way the property after closing (as posted previously).  Not all real estate agents are familiar with short sales, even in this market.

I agree with Jennifer - find another agent.

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Oh geesh! 

So is there anything I can do about this? Or just move on and find another home?

Thanks in advance

[StartingOver10]

If the house is under contract, then go out and get another agent to actually represent you.  Even if it's not under contract - find a good agent first. Find another house and have your agent check to see if the house is actually under contract. You can write a back up offer if you like, but it is probably best to move on to a house that is actually available. One of the things you should look for, if you are going to look at short sales or REO's is an agent that has experience in that area of the business. It will keep you from getting into deals that won't work. Look for a CDPE designation (Certified Distressed Property Expert) and you will elminate a lot of the turmoil with buying a short sale.

[tubesock]

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@StartingOver10 wrote:

If the house is under contract, then go out and get another agent to actually represent you.  Even if it's not under contract - find a good agent first. Find another house and have your agent check to see if the house is actually under contract. You can write a back up offer if you like, but it is probably best to move on to a house that is actually available. One of the things you should look for, if you are going to look at short sales or REO's is an agent that has experience in that area of the business. It will keep you from getting into deals that won't work. Look for a CDPE designation (Certified Distressed Property Expert) and you will elminate a lot of the turmoil with buying a short sale.

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The home is not under contract. As mentioned earlier, they are only accepting a contract from a buyer who is willing to rent it back to them.

I'm just going to move on.

Thanks again everyone!