Buyer Beware!
Mary Sanchez from the Kansas City Star brings us a story that all of you would be REO buyers should pay attention to. In my travels, I frequently hear how hot the REO market is. When a property goes on the market it oftentimes has multiple offers. Frenzied buying similar to the mid 2000’s. The article demonstrates that you don’t always get what you bargain for when you purchase a bank owned property.
Email me your stories that describe how you or a friend have been burned with the purchase of a bank owned home (for an example, read the article!)
Buyer finds trouble with purchase of foreclosed home
By MARY SANCHEZ
By MARY SANCHEZ The Kansas City Star
On Friday, Jack Douglas checked the roof of the foreclosed Agnes Avenue home that he bought in December
To say Jack Douglas got the runaround when he tried to pay cash for a foreclosed house is a huge understatement.
He got ripped off.
Literally, by the vandals who stripped out the furnace, water heater and most of the water pipes. And indirectly by others involved in the sale through the U.S. Department of Housing and Urban Development. Thieves had time to kick both the back and front door in during repeated break-ins while bureaucracy dawdled.
It’s a saga that astounded members of a committee concerned with foreclosures and vacant properties in Kansas City.
How indicative it is of similar dealings with low-income foreclosures is up for debate. The right people, including HUD’s regional administrator, are paying attention now.
But Douglas’ new home in the 3700 block of Agnes Avenue is unlivable. The 50-year-old man is on disability, unable to drive or work due to seizures.
In late December, he bought the house outright, plunking down $8,000 cash. One would think cash would talk. It took some shoving.
The first real estate agent tried to steer him to a higher-priced home, refusing to handle the sale of the two-bedroom house he wanted. Other agents wouldn’t return his phone calls. “I guess the commission would be too low for them,” Douglas surmises.
Douglas finally connected with real estate agents Ron and Joan Yaffe, who aided during the next two months of negotiations on the price.
HUD, through a company that handles its foreclosure properties, made numerous counter-offers. The Yaffes were told several times that counters can come back higher than the list price on low-priced foreclosures. The original asking was $8,000. Douglas offered $5,000 cash, then $6,000. One counter would have made the sale $9,300.
Then came the disputes about buying “as is.” The sale hadn’t closed when the break-ins occurred. Eventually, Douglas got a $750 credit, which isn’t even close to the $3,000 to $5,000 estimate to replace the furnace, pipes and water heater.
Ron Yaffe wrote up a four-page account of Douglas’ troubles. It’s in the hands of HUD officials in Washington now.
Locally, Neighborhood Housing Services will try to aid with repairs.
It appears a series of gaffes played out, bungling the deal through bureaucracy, miscommunication and probably a bit of classism. Counter offer policies that work for higher-priced properties might need adjusting for lower-priced homes, given the current market.
Douglas represents what such homes, often in blighted areas, need. He was highly motivated and wanted to be the owner/occupier of a foreclosed house.
A cash-in-hand buyer like him should find the way paved.