For the past few months, I have been working with two different buyers on finding a home. One is a first time home buyer looking to purchase a foreclosure, and the other is an investor looking to pick up a fixer-upper so they can hold long term and make some money in the future on their investment (the real way real estate should be bought).
This past month, both buyers found the home they wanted to buy in Minneapolis, and yes, both were banked owned. We take the time to write up offers on these homes, fill out the endless amount of extra paper work required by banks, sign multiple disclosures on how the bank is not responsible for this and that…and we sit and wait.
Amazingly both banks respond quickly with-in a week. One bank counteroffers and my client waits a few weeks to counter back, as we have to figure a way to follow “the banks rules” on how much they can contribute to the buyers closing costs. When we do get back to the bank with a great compromise, we discover that the bank is not excepting any offers as they have a title issue.
The second bank lets us know they have accepted another offer. After a month of waiting to see if the deal goes through, I get on MLS one day to see the house taken off the market. After a call to the agent, I discover that the bank has a title issue – apparently there is still a mechanics lien on the house and is now in the redemption stage, as the bank messed up the foreclosure process.
You would think that the bank would actually do some title research before they put a foreclosed home on the market. I mean, dotting your I’s and T’s in the beginning, keeps you from having problems in the end. But alas, banks get a free pass on this issue. They suck at selling real estate. Any other business would have stream lined the process and made it easier for both buyer and seller. For now, neighborhoods have to continue to be blighted with homes that banks can’t sell…not because there aren’t any buyers, but because the bank has become its own worst enemy.
I guess my main issue with these title issues is the fact that bank makes the buyer wait. But if the role had been reversed, and the buyer needed a few more days to close, the bank would punish the buyer and charge a per-diem or worse. So for now, my buyers must start the search process all over again. Let’s just pray we encounter a smarter bank along the way…..I won’t hold my breath.
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Clean title was once a perk of selling REO properties, the one thing that made you feel good about the transaction.