Bank is Trying to Intimidate Buyer
Posted by mortgageforensics on May 22, 2009
Q: I am buying a bank owned foreclosed home in Michigan. The asking price was $$40,000, but wee finally agreed on $37,500 with concessions of $2,500. Closing is to take place no later than the end of this month. Two weeks ago, I was faxed an addendum that states the sellers concessions will be 2,250, and not $2,500, and that if I don’t sign the addendum, the contract is void. I have already given the bank a deposit of $1,000. My Good Faith Estimate states that I will need to bring approximately $3,500 with me to the closing. I have already paid the Mortgage Appraisers $400, and I have already signed the addendum that states I will not get a “warranty deed” but instead I will receive a “quit claim” deed. In addition to the money needed at closing, I also have to pay my real estate agent a fee of $195 and a “reo compliance fee of $395.
Does this all sound right? thank you for any help you can offer.
A: You have raised a number of different issues, which I will try to address:
1. A quit claim deed is not as good as a warranty deed and it does not give you a perfect title to the property; however, most deeds given in foreclosure sales provide a less than perfect title, as this is the nature of the beast. Having said that, it seems to me that since you are not buying the property in a foreclosure sale but directly from the bank, you should insist on getting a warranty deed.
2. Only a review of your contract can determine whether the seller can change the concession from $2,500 to $2,250. Normally, I would not get too uptight over a minor change of $250, but the question remains: does the contract allow the seller to change the seller’s concessions?
3. The closing fees could have been negotiated by you when you first made the offer to purchase. As they stand now, they are certainly not out of line.
Since the purchase of a bank-owned property introduces some elements of risk to the transaction, it would make sense to spend a couple of hundred dollars and have an attorney review the documents.
