NA...Home selling nightmare

tawood

tawood

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Tim
I've bought and sold quite a few homes in my past. In my younger days I would buy a house, live in it a year while I fixed it up, then sell it/on to the next house....kept me busy and it has allowed me, over time, to live in much nicer/bigger homes than I would have been able to afford otherwise. I also guess I was lucky because I've never run into a nightmare buyer...until now.
My first clue should have been when the guy requested to come to look at the house in the first place...at 10:30 at night! Second clue should have been the ridiculousness of his first offer (not so much the amount of his offer, but the overwhelming number of contingencies, escrows, insurance requirements, etc). Third clue was his home inspection (he actually listed hundreds of things "wrong" with my house, such as saying that paver bricks aren't code...nearly everything on his list was laughable...I'm also a licensed residential contractor, and I know what is/is not code).
Now, two days before close, he requested I renegotiate...or else!
Sigh, I can only blame myself...the guy gave me plenty of warning.
 
Sounds like someone who's looking to not buy a house.

That said, plenty of inspectors put things in their reports that aren't exactly correct and scare buyers. "Plumbing not up to code." may mean the most recent water heater was installed before the local regs were updated to include an expansion tank and a backflow preventer. (The setup is legal, it would just need to be updated at the next water heater replacement.)

Then you get a buyer who demands those plumbing changes and you either talk him off the ledge, accommodate him, or let him walk.
 
We had something (fortunately not that bad) with selling our home in PA. We just told them to shove it and moved on to the next offer, which was still for the asking price. Wasted our time but long term didn't cause any real issues.
 
Skip Miller said:
I hope you told him, "I'll take the 'else'. Bye!"

-Skip
Click to expand...
Yes...but another mistake I made was using a realtor, who normally "waters down" my statements. This time I told her she MUST give my response word-for-word...

I've sold quite a few houses without a realtor, and I normally consider them completely unnecessary (I also think a typical realtor is a person who couldn't get a job doing anything else). I had a unique situation selling this house that made the price of a realtor worth it...or at least it seemed in the beginning.
 
kyleb said:
Sounds like someone who's looking to not buy a house.

That said, plenty of inspectors put things in their reports that aren't exactly correct and scare buyers. "Plumbing not up to code." may mean the most recent water heater was installed before the local regs were updated to include an expansion tank and a backflow preventer. (The setup is legal, it would just need to be updated at the next water heater replacement.)

Then you get a buyer who demands those plumbing changes and you either talk him off the ledge, accommodate him, or let him walk.
Click to expand...
Yeah, I get that with inspectors...but to list "gloss paint on banister is a slip hazard"??? "Faux security camera does not function"??? Does he know what the purpose is of a faux security camera?
 
If you do go through with this, the guy will find something "wrong" and take you to court. Guess how I know...
Keep a copy of the "inspection" so you can show that the buyer knew the condition of the house when he bought it.
 
Capt. Geoffrey Thorpe said:
If you do go through with this, the guy will find something "wrong" and take you to court. Guess how I know...
Keep a copy of the "inspection" so you can show that the buyer knew the condition of the house when he bought it.
Click to expand...
Yes, I fear this as well...I'm photographing/video taping the whole house and its function as I move out...
 
So you're the guy that invented the house flipping industry and keeps my wife watching HGTV?
 
Had a similar experience as a buyer.
All sorts of weirdness.
I was looking for another "fixer upper" and this house fit the bill.
The seller insisted the house was Buckingham Palace.
There was only one point in this entire process that filled him with glee. I was using the "right" bank and mortgage company.
The seller had a fit when I refused to use his "inspector".
He insisted that the inspector couldn't go into the attic.
It had to be inspected on a particular date, at night.
All the appliances and lights came with the house, but I was not allowed to test them because the electricity and water were off.
Of course, we ignored everything he demanded. The real estate agent was a friend from my old neighborhood when I was a kid. The owner had given the house to IBM to sell when he was transferred out of state, so the real estate broker actually worked for IBM, which means she worked for me.
I brought my own water wrench, turned on the water, (neighborhood well, perfectly legal) and had an electrical meter put in so we could do really thorough inspection.
As I suspected, there was a bunch of stuff wrong with the house.
Most of the appliances were crap. There had been a bunch of illegal work done on the house which had to be fixed (I had the town come in and they revoked the certificate of occupancy for the house).
After all that was settled (the house has now been sitting empty for almost 3 years, and I'm 6 months into my part of the process) the owner announced he was taking the lighting fixtures out.
I told them "Keep the house".
Panic ensues. "You're going to walk away for a couple of hundred dollars in lighting fixtures?"
"No, I'm walking away on principle."
Next day: light fixtures stay (BTW: I took most of them out and trashed them during the reno.)
But here is where things REALLY got weird.
The mortgage company was refusing to tell me what my rate was going to be. This was 1986, at the height of the mortgage boom. Rates were soaring, hourly.
I'm being told they won't tell me my rate until I'm at the closing.
The broker calls me. "I have some interesting news. The Owners wife is the head of the mortgage department."
Screw this.
I tell Kathy, the broker, postpone the closing for one week.
I call my lawyer and tell him what I plan to do. "OK, you need to ask them for these three pieces of paper. All you need to do is sign them, I don't even need to be there."
I sold a bunch of stock. I withdrew the cost of the house, in cash. I put it in a briefcase and went to the closing.
When I walked in the room at 9:00 A.M it was FULL of people. Lawyers, brokers, brokers lawyers, Title people, mortgage people and their lawyers. Recording secretaries and their lawyers. A bus load of tourists.
"Um, where is your lawyer?"
"Don't need one."
There is a ripple through the horde. A fish (me) is about to be gutted.
I ask for the 3 documents specified, they collectively blink, then hand them to me. I sign them.
I put the briefcase on the table and ask for the keys to the house.
Wait! We need to do money stuff they say. You need to "hire" all these people and pay them.
I open the briefcase and dump the money on the table.
Kathy, the broker, hands me the keys.
"You can keep the briefcase." And I walked out.
All those people were in there, expecting me to sign checks to pay them. I don't need to pay anyone. No. body. got. paid.
About 6:00 P.M. the phone at my new house rings. It's Kathy, and it sounds like there is a riot going on in the background. "Would I please come back and get the cash? They want to give me a mortgage at a really, really great rate, and no points, everyone is sorry," etc, etc.
"Nope"
Do you know what happens in America when you show up at a bank with a few hundred thousand dollars in a briefcase?
Most banks won't touch it.
Then the FBI gets involved.
Your name goes on a list. Lots of government agencies become your close personal friends.
A couple days later, there is a knock on the door.
"Come in agents. I've been expecting you."
I show them all my documentation. They are satisfied, but not very happy. No sense of humor, I guess.
I'm still living in that house, and I love telling this story. So does Kathy, the broker. IBM pays her commission.
 
Shepherd said:
Had a similar experience as a buyer.
All sorts of weirdness.
I was looking for another "fixer upper" and this house fit the bill.
The seller insisted the house was Buckingham Palace.
There was only one point in this entire process that filled him with glee. I was using the "right" bank and mortgage company.
The seller had a fit when I refused to use his "inspector".
He insisted that the inspector couldn't go into the attic.
It had to be inspected on a particular date, at night.
All the appliances and lights came with the house, but I was not allowed to test them because the electricity and water were off.
Of course, we ignored everything he demanded. The real estate agent was a friend from my old neighborhood when I was a kid. The owner had given the house to IBM to sell when he was transferred out of state, so the real estate broker actually worked for IBM, which means she worked for me.
I brought my own water wrench, turned on the water, (neighborhood well, perfectly legal) and had an electrical meter put in so we could do really thorough inspection.
As I suspected, there was a bunch of stuff wrong with the house.
Most of the appliances were crap. There had been a bunch of illegal work done on the house which had to be fixed (I had the town come in and they revoked the certificate of occupancy for the house).
After all that was settled (the house has now been sitting empty for almost 3 years, and I'm 6 months into my part of the process) the owner announced he was taking the lighting fixtures out.
I told them "Keep the house".
Panic ensues. "You're going to walk away for a couple of hundred dollars in lighting fixtures?"
"No, I'm walking away on principle."
Next day: light fixtures stay (BTW: I took most of them out and trashed them during the reno.)
But here is where things REALLY got weird.
The mortgage company was refusing to tell me what my rate was going to be. This was 1986, at the height of the mortgage boom. Rates were soaring, hourly.
I'm being told they won't tell me my rate until I'm at the closing.
The broker calls me. "I have some interesting news. The Owners wife is the head of the mortgage department."
Screw this.
I tell Kathy, the broker, postpone the closing for one week.
I call my lawyer and tell him what I plan to do. "OK, you need to ask them for these three pieces of paper. All you need to do is sign them, I don't even need to be there."
I sold a bunch of stock. I withdrew the cost of the house, in cash. I put it in a briefcase and went to the closing.
When I walked in the room at 9:00 A.M it was FULL of people. Lawyers, brokers, brokers lawyers, Title people, mortgage people and their lawyers. Recording secretaries and their lawyers. A bus load of tourists.
"Um, where is your lawyer?"
"Don't need one."
There is a ripple through the horde. A fish (me) is about to be gutted.
I ask for the 3 documents specified, they collectively blink, then hand them to me. I sign them.
I put the briefcase on the table and ask for the keys to the house.
Wait! We need to do money stuff they say. You need to "hire" all these people and pay them.
I open the briefcase and dump the money on the table.
Kathy, the broker, hands me the keys.
"You can keep the briefcase." And I walked out.
All those people were in there, expecting me to sign checks to pay them. I don't need to pay anyone. No. body. got. paid.
About 6:00 P.M. the phone at my new house rings. It's Kathy, and it sounds like there is a riot going on in the background. "Would I please come back and get the cash? They want to give me a mortgage at a really, really great rate, and no points, everyone is sorry," etc, etc.
"Nope"
Do you know what happens in America when you show up at a bank with a few hundred thousand dollars in a briefcase?
Most banks won't touch it.
Then the FBI gets involved.
Your name goes on a list. Lots of government agencies become your close personal friends.
A couple days later, there is a knock on the door.
"Come in agents. I've been expecting you."
I show them all my documentation. They are satisfied, but not very happy. No sense of humor, I guess.
I'm still living in that house, and I love telling this story. So does Kathy, the broker. IBM pays her commission.
Click to expand...

Hilarious. I love it.
 
tawood said:
I've bought and sold quite a few homes in my past. In my younger days I would buy a house, live in it a year while I fixed it up, then sell it/on to the next house....kept me busy and it has allowed me, over time, to live in much nicer/bigger homes than I would have been able to afford otherwise. I also guess I was lucky because I've never run into a nightmare buyer...until now.
My first clue should have been when the guy requested to come to look at the house in the first place...at 10:30 at night! Second clue should have been the ridiculousness of his first offer (not so much the amount of his offer, but the overwhelming number of contingencies, escrows, insurance requirements, etc). Third clue was his home inspection (he actually listed hundreds of things "wrong" with my house, such as saying that paver bricks aren't code...nearly everything on his list was laughable...I'm also a licensed residential contractor, and I know what is/is not code).
Now, two days before close, he requested I renegotiate...or else!
Sigh, I can only blame myself...the guy gave me plenty of warning.
Click to expand...

If I may... having been an agent (part time) years ago and having bought and sold a few properties over the years..

As for looking at a home that late at night is a little strange, but not totally out there... I had a client that worked a swing shift and the only time they (husband and wife) could look was after 8:00 PM or the weekends... At that time the market was pretty hot so if something came up we had to jump on it..

Your second inclination was right... never take an offer with contingency.. to me contingency means they are buying time or looking for a negotiation point.. I don't know what state you are in, but where I am at there is a standard protocol that the closing cost are handle by both the buyer and seller...

The home inspection... had a similar situation once, the buyer came back with a laundry list of things to fix... stupid stuff like switch plates etc... as I explained to them, this is not a squawk list for the seller to fix, but a list of stuff that they should be aware before moving forward purchasing the house... Also the buyer is made aware that the house is being sold as is, this should have been listed in the MLS. This also needs to be confirmed in the counter offer. When I listed a house I had the seller give me a list of all the problems that could come out in an inspection, research etc... even had my own inspector look at if the house was old and/or rough looking.. Had one situation where the seller knew of the termite damage and was going to have that and a few other things done once the termite and pest report was done... But I will say, I have seen some real chicken**** stuff over the years... Even had one where the wife did not like the neighbors fence and dogs and expected the seller to do something about it. My favorite sayin was to a buyer agent was.... "Hmmm excuse me what part of as is are you not understanding.."

As for the deposit, two days before the close??? The loan documents, title research, hazard reports, etc... should have all been completed and in review with the escrow/title company... there is also a written offer/contract with performance benchmarks, and at this point they should have all been met... I say call their bluff... or better yet, tell them if they don't close but the agreed date with the agreed price you closing escrow and keeping all earnest monies and relisting the house...

One last question, are you working with an agent or is the a FSBO?
 
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The market is still pretty good, I would just give him his earnest $ back and move on. Once lawyers get involved everyone loses (except the lawyers)...
 
Shepherd said:
Then the FBI gets involved.
Your name goes on a list. Lots of government agencies become your close personal friends.
A couple days later, there is a knock on the door.
"Come in agents. I've been expecting you."
I show them all my documentation. They are satisfied, but not very happy. No sense of humor, I guess.
I'm still living in that house, and I love telling this story. So does Kathy, the broker. IBM pays her commission.
Click to expand...

I would have loved to have been there at that closing... and yes FBI agents have no humor...

My first introduction to the Hispanic way of doing business was a home purchase... all cash... no BS...
 
idahoflier said:
The market is still pretty good, I would just give him his earnest $ back and move on. Once lawyers get involved everyone loses (except the lawyers)...
Click to expand...

Very sound advice and will keep everything clean... but this depends... in California, many of the real-estate laws are written to protect the buyer... but you would be had pressed to find a lawyer that would be willing to challenge this at this juncture of the game.... Maybe after the home inspection, or a contingency upon appraisal/securing a loan or at some other point earlier in the process, but two days before closing let alone the buyer's posture.

I had a situation where a son was buying a condo for his father for his health reason and wanting him closer.. the son had asked for a 60 day closing so he could sell the current home and get him moved to the area and a few other things which the seller agreed to.. Getting close to the closing date the father's health took a turn and he required a nursing facility after a brief stint in the hospital. Of course the son comes back and wants to cancel the purchase and get the deposit back... the owner/seller denies this. In his mind he had met all the contingencies and the considerations/request of the buyer, had taken property off the market an lost the opportunity to sell it, and had spent money to market/sell the property... I brought this to my broker's attention who was also a lawyer and he said, at this point all they could do is hope for the seller to have a little sympathy on the situation, other than that "by by" on the deposit.
 
Nothing confuses the real estate racket more than a cash buyer (or in my case one who wired the entire purchase to the escrow company prior to the closing). No, I don't need this that and the other piece of paper or insurance.
 
The only thing I'd add is to be sure you're properly declaring the taxes on this. This isn't a capital gain situation. You appear to be in the business of rehabbing houses and need to treat the buying and sales as such.
 
flyingron said:
The only thing I'd add is to be sure you're properly declaring the taxes on this. This isn't a capital gain situation. You appear to be in the business of rehabbing houses and need to treat the buying and sales as such.
Click to expand...
Nope, not a business when you live in them for year+ before each sale, and then use the proceeds in their entirety to purchase another bigger house that you will live in.
 
weilke said:
Nothing confuses the real estate racket more than a cash buyer (or in my case one who wired the entire purchase to the escrow company prior to the closing). No, I don't need this that and the other piece of paper or insurance.
Click to expand...
When I bought my son a condo at college, we wired the money and at the closing I refused title insurance, you would have thought I called the lawyers mom a really bad name!! He almost wouldn't do the closing, I asked him if he had checked the title and he said yes. I told him that was good enough for me! I am not a fan of title insurance, especially if I know the seller or at least the history of the property.
 
tawood said:
I've bought and sold quite a few homes in my past. In my younger days I would buy a house, live in it a year while I fixed it up, then sell it/on to the next house....kept me busy and it has allowed me, over time, to live in much nicer/bigger homes than I would have been able to afford otherwise. I also guess I was lucky because I've never run into a nightmare buyer...until now.
My first clue should have been when the guy requested to come to look at the house in the first place...at 10:30 at night! Second clue should have been the ridiculousness of his first offer (not so much the amount of his offer, but the overwhelming number of contingencies, escrows, insurance requirements, etc). Third clue was his home inspection (he actually listed hundreds of things "wrong" with my house, such as saying that paver bricks aren't code...nearly everything on his list was laughable...I'm also a licensed residential contractor, and I know what is/is not code).
Now, two days before close, he requested I renegotiate...or else!
Sigh, I can only blame myself...the guy gave me plenty of warning.
Click to expand...

how's that saying go? oh yeah, "some people are just A-holes"
 
flyingron said:
The only thing I'd add is to be sure you're properly declaring the taxes on this. This isn't a capital gain situation. You appear to be in the business of rehabbing houses and need to treat the buying and sales as such.
Click to expand...

tawood said:
Nope, not a business when you live in them for year+ before each sale, and then use the proceeds in their entirety to purchase another bigger house that you will live in.
Click to expand...

Correct, but I'm pretty sure the rule is having it as your primary residence for at least two years in the preceding five years before the sale. As long as you meet that, and don't exceed the $250K capital gain ($500K married jointly) threshold you're fine. Also, if you have done this multiple times, you can run into issues claiming the exemption on prior properties depending on how closely the timeline is spaced.
 
There are all sorts of parasitic losses in buying and selling homes.

A long time ago, I went to refinance my circa 1990 mortgage on my first house. It was an FHA loan at 9.5% and I was paying PMI on top of the note.

I think the rate was dropping to 7.5% or something like that with the refi.

Anyway, it was supposed to be a simple refi (no cash out) so all I needed to do was show up and sign papers.

Long story short, nobody except me had looked at the loan to appraisal numbers, and based on the "new" appraisal, I'd be borrowing 80.1% of the appraised amount, which meant I'd have to continue PMI, and I think pay some up front PMI at closing or some such nonsense. I went to closing, asked how big of a check I needed to write to get out of PMI and it freaked them out. They were not at all prepared for that and had to do a bunch of back-office work to figure out that if I wrote a check for $200 or some trivial amount, it eliminated PMI at $60/month and maybe another crap fee or two.

We closed a day or two later, no PMI and at a better interest rate too...

You're the only person in the room who is looking out for you as their first priority.
 
N747JB said:
When I bought my son a condo at college, we wired the money and at the closing I refused title insurance, you would have thought I called the lawyers mom a really bad name!! He almost wouldn't do the closing, I asked him if he had checked the title and he said yes. I told him that was good enough for me! I am not a fan of title insurance, especially if I know the seller or at least the history of the property.
Click to expand...

What you did is expose him to a claim if his examination of the title was insufficient. Oh, you also took the kickback from the title company out of his pocket. Double-whammy

In the subject property where I refused, the title chain was simple: Charles I, Lord Baltimore, Some tobacco baron, tobacco barons caretaker, Me.

I figured the British crown is not going to dispute my title claim and the other transactions were in modern times and well documented.
 
SoonerAviator said:
Correct, but I'm pretty sure the rule is having it as your primary residence for at least two years in the preceding five years before the sale. As long as you meet that, and don't exceed the $250K capital gain ($500K married jointly) threshold you're fine. Also, if you have done this multiple times, you can run into issues claiming the exemption on prior properties depending on how closely the timeline is spaced.
Click to expand...
The capital gains exclusion is a distinct issue from whether it's a capital gain or passive investment. It all depends on what me meant by "a year" in his comment. Generally holding the property for rental purposes or personal residence for over a year, won't lead you to being interpreted as being a dealer. Holding it less, may.
 
kyleb said:
There are all sorts of parasitic losses in buying and selling homes.

A long time ago, I went to refinance my circa 1990 mortgage on my first house. It was an FHA loan at 9.5% and I was paying PMI on top of the note.

I think the rate was dropping to 7.5% or something like that with the refi.

Anyway, it was supposed to be a simple refi (no cash out) so all I needed to do was show up and sign papers.

Long story short, nobody except me had looked at the loan to appraisal numbers, and based on the "new" appraisal, I'd be borrowing 80.1% of the appraised amount, which meant I'd have to continue PMI, and I think pay some up front PMI at closing or some such nonsense. I went to closing, asked how big of a check I needed to write to get out of PMI and it freaked them out. They were not at all prepared for that and had to do a bunch of back-office work to figure out that if I wrote a check for $200 or some trivial amount, it eliminated PMI at $60/month and maybe another crap fee or two.

We closed a day or two later, no PMI and at a better interest rate too...

You're the only person in the room who is looking out for you as their first priority.
Click to expand...

I read through ALL the paperwork at my closing. Took my time doing so. They were not happy I didn't just sit and sign. But I found stupid things in the loan documents, like, "may not store more than 1 gallon of fuel on the property." I was like, no effin way, I've got a riding lawnmower, a weed whip and a snowblower. One takes regular gas, and two take mixed, and I have to make at least a gallon of mixed gas with the 50:1 bottles. What am I supposed to do, drive my lawn mower to the gas station, so I'm not storing it? I ended up lining out a bunch of things in the loan docs. When I was finally done they said I was the first person any of them could remember actually reading through the papers before signing them.
 
weilke said:
What you did is expose him to a claim if his examination of the title was insufficient. Oh, you also took the kickback from the title company out of his pocket. Double-whammy

In the subject property where I refused, the title chain was simple: Charles I, Lord Baltimore, Some tobacco baron, tobacco barons caretaker, Me.

I figured the British crown is not going to dispute my title claim and the other transactions were in modern times and well documented.
Click to expand...
Yeah the "commission" on title insurance is 50%, so that's why it's pushed so hard at closing, easy money!!
 
weilke said:
Nothing confuses the real estate racket more than a cash buyer (or in my case one who wired the entire purchase to the escrow company prior to the closing). No, I don't need this that and the other piece of paper or insurance.
Click to expand...
For sure. I've had multiple closing agents call as they're finalizing the paperwork and say "we don't have your mortgagee's name", I say "there isn't one", they say "no no no, it's the company you're getting a loan from", I say "you're getting a wire from me the day before closing, it's a cash purchase", then they act like they've never heard of such a thing. Never mind that the purchase contract specifies cash from buyer at closing. Not surprisingly, the title companies in small, rural areas have always seemed to have no issues with this situation, just those in urban areas.
 
That's because the attitude of most of America is "why save for later, when you pay more for it now?"
 
N747JB said:
Yeah the "commission" on title insurance is 50%, so that's why it's pushed so hard at closing, easy money!!
Click to expand...

Here it is required in you're taking out a loan on the property... seems that lenders want their comfort level.. and is usually handled once they open an escrow..
 
tawood said:
Nope, not a business when you live in them for year+ before each sale, and then use the proceeds in their entirety to purchase another bigger house that you will live in.
Click to expand...
You will reach a point where you really can't go "onward and upward", but the "cash out" home sale exemption is pretty generous. I know that I'm living in the largest house I'll ever own. The next one will be smaller, less expensive, and in a warmer climate.
 
Ventucky Red said:
Here it is required in you're taking out a loan on the property... seems that lenders want their comfort level.. and is usually handled once they open an escrow..
Click to expand...
I wouldn't even take a gift of property from my sainted aunt without owner's title insurance. You have no assurance of whether you own the property without a proper search and the insurance to back it up. The lender will certainly want it, but the lender's policy won't necessarily protect YOUR interests.
 
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