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Protect your Buyers: Bank owned trick #1

For those of you who haven't had the opportunity to sell a bank owned property yet, look out for this little fast one the bank likes to try, if you're not looking for it, you just may miss it:

Recording fees, escrow fees and other customary closing costs WITH THE EXCEPTION OF TRANSFER TAXES, shall be paid by either Seller and/or Buyer in the manner customary for residential real estate transactions in the city in which the Property is located.

ALL OTHER COSTS AND EXPENSES, INCLUDING ANY COST, EXPENSE OR TRANSFER TAX, imposed by any state or local entity not otherwise addressed herein, including any tax or assessment imposed upon the Property for any period prior to the closing date due to a change in the use of the Property after the closing date SHALL BE PAID BY THE BUYER.

This seems pretty cut and dry but when its hidden in a 22 page bank addendum you just might miss it. I can tell you my personal experience having represented buyers who purchased properties from 5 different banks (but far more than 5 properties) this clause will be hidden in the addendum although the verbiage may not be exact.

The most recent foreclosure transaction I have is under agreement is for $230,000, and in New Hampshire the transfer tax stamps will be over $1,700. I would absolutely hate to explain to my buyer that I screwed up if I were a newer agent who missed this clause. I guess ultimately they would have the right to come back at me and essentially I might be the one paying the transfer tax stamps.

So agents educate yourselves, ask your fellow agents for help, and know the bank is looking to recoup any monies they can. They are sometimes selling the property for less than half what they took it back at. Good luck and good selling, and as always, I'm more than happy to answer any questions.

Wishing you the best in life and business,

Joshua Matthews-Keller Williams Coastal Realty

Posted by Joshua Matthews on 02/25/2008 05:35 PM

Comments (11)

foreclosure, shortsale, protect your buyers, tax stamps, addendum

This post has been included in New Hampshire Information

11 Comments on Protect your Buyers: Bank owned trick #1

FEB

2008

Yes Joshua, this is a little area that a lot of people don't know about, but costs hundreds of dollars. A good heads-up for new agents. Who needs to learn the hard way.

Matthew -- you are the best. I have attended several foreclosure and short sales seminars now -- and I keep asking what do I need to watch out for as a buyer's agents - -this was never pointed out! Thanks for helping us know what is in the fine print!

It's always good to ask for help if you need it Joshua. So many just let their ego get in the way. Good Post.

Great post. i learned something new today!! Thank You, Sharon Harris

Great post. It is things like this that can throw a wrench in the deal.

I have not sold a bank owned home yet, but thanks for the information. I will know to be very careful when I do sell one.

Joshua, I work both sides of REO and it's refreshing to have agents read those addendums as they are written by the bank for the bank and most buyers and thier agents act like they are dealing with a regular seller but they are working with an institution. Most things can be worked out but when I get the call at the last minute and the agent says they didn't about per diem etc and the buyers signed the addendums it too late. Sounds like you are doing a good job for your clients and local customs can be explained to the asset managers as they are usually are in a different state than the property.

I agree with Cameron - most things can be worked out, but it always amazes me when an agent calls me and says "I really didn't read the bank addendum, and now I see that..........."

And yet you advised your client to sign it?

FEB

2008

Yes, I agree with both Cameron and Kevin about due diligence and buyer representation. I guess I would add to that: what sort of training are you being offered as a new agent by your office and is anyone reviewing your contracts before they are submitted to make sure your broker is keeping you out of trouble? Do you have a mentor at your office to teach you the ropes? I am a mentor to a few agents at my office but as a member of the ALC(essentially a board of directors), every agent in my office (over 100) knows that my door is always open, so if they have a question, I'm more than happy to offer my time, expertise and advice. This sort of mistake wouldn't be covered under your E & O insurance so understand the chances are, it's going to come directly out of your commission.

Wishing you the best in life and business,

Joshua Matthews-Keller Williams Coastal Realty

FEB

2008

Thanks for the post Josh. Just the tips I need as a new agent to protect my buyers. I feel, with more and more investors looking at bank owned properties, this could be some very helpful information to have.

Paul Carrier-Keller Williams Coastal Realty

MAR

2008

Joshua: Yeah, we've seen that one too. I'm sure that they have plenty of other tricks up their sleeves as well. I would also recommend that a buyer client have their attorney review the bank addendums, just in case.

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