Bank of America did not get enough money from during the Bailout! It needs some contributions from Key West Realtors to help it through the bad times. Here is the set up:
There is a real pretty house located on a very nice street in Old Town Key West. It was sold in 2004 for over $1,250,000. The economy soured. The owner put the house on the market in early 2006. The listing eventually became a short sale. Months passed by. The seller accepted several offers from various buyers. Each of the offers failed due to the passage of too much time or because the lender (Bank of America) rejected the dollar amount offered. As time passed the economy in Key West got a little worse and the market value of houses in Old Town began to slip. And the value of the pretty house on the very nice street in Old Town went down as well.
The seller used the same Realtor during the entire sales process. The Realtor is one of the top producers in Key West and has a rich history in selling fine homes. A professional short sale negotiator was engaged to help facilitate the short sale negotiation (God, that sounds like something I'd write if I were still in real business).
I represented a buyer who made an offer to purchase the house in March 2009. The offer was very simple: all cash with a quick close within 30 days of the acceptance by seller's lender of the short sale offer. Seller signed the contract and the short sale negotiator started the process to get lender approval.
Weeks and then months passed by and my buyer started getting a little nervous. The deal was going nowhere. In late June we received notification that the lender had accepted the price my buyer offered.
The seller no longer lived in the house. The pool pump was not working correctly, so the pool was turned off. The water turned Kermit green. My buyer and his family flew down to do the inspection. The inspection went fine, but that algae filled pool could have killed the sale.
The lender "approval" seemed to disappear. We didn't see anything in writing. My buyer was getting nervous. I was getting agitated. At our request the short sale negotiator furnished us with a copy of an email from the lender that approved the price. But Bank of America wanted seller to kick in $25,000 plus provide additional documentation that the seller did not have funds to pay off the hundreds of thousands of dollars Bank of America was being asked to forgive. Okay, I get part about not having hundreds of thousands of dollars squirrelled away someplace. Except that the seller had repeatedly supplied the same financial disclosures to Bank of America. His financial condition did not get any better. But the condition of the house was getting worse each day.
Exasperated, my buyer and I asked a local attorney to write a letter to Bank of America advising that the seller had abandoned the property and reminding the bank that the buyer was ready to close as soon as the bank approved the contract. More than another week passed. Nothing happened. Our contract was about to expire. The seller was thoroughly pissed at Bank of America for screwing around with this for so long.
We got word that Bank of America had again accepted my buyer's cash offer but this time the acceptance was conditioned upon receipt of an additional $20,000. (Down from $25,000 a few weeks earlier.)
I sent the Bank of America negotiator an email reminding him that the seller had abandoned the property; that the house had no electricity; that the pool was now green with algae and had become mosquito infested; that my buyer was "cash' and ready to close; and that there were three storms in the Atlantic. I suggested that if the bank declined to close the deal that it get a receiver appointed to take possession of the premises before the house got in really bad disrepair.
Again, nothing happened that we were aware of. My buyer then sent an email directly to the same rep at Bank of America. My buyer simply reminded the the bank that he had made a good faith offer to buy a house. He did not understand why Bank of America was requesting more money.
The Bank of America rep replied: "There is some miscommunication here. The Bank is not requesting any further funds from the Buyer. As far as the bank is concerned we are accepting the $***,*** offer. The request for additional monies is to come from the Agents' and or Seller in order to complete the approval process." This is a direct quote except that I deleted the dollar amount so as not to identify the property.
My buyer responded and pointed out that the bank's demand for more monetary contribution from the Realtors was hindering the process, not making it any better. My buyer told the bank rep cutting the commissions was undermining the Realtor's incentive to sell. Somehow, someway, my buyer got the guy at the bank to loosen up. Moneybags at Bank of America decided to forget the $20,000 contribution from the Realtors. The purchase amount was approved. But Bank of America cut our commission to 4%. It planned to cut our commission to about 3% total. Wasn't that kind.
The deal is done. Over. My buyer got a really nice house and I am genuinely happy for him and his family. I wanted them to buy the house next to mine. It was foreclosed by another bank. (A local bank. It actually spent new money taking care of that house.) I think they would be great neighbors. But my buyer got a really good deal. I made $1.32 per hour working on this. The listing Realtor made less. This property was on the market for over 1,000 days. By the way, because of its delay in getting the various prior offers approved, Bank of America got at least $360,000 less than the first offer it turned down.
What happened on this transaction is normal operating procedure for Bank of America and other large lenders. They demand the Realtors help make the loss more acceptable to the lender by demanding real estate commission reductions.
Earlier this year Fannie Mae issued a Directive prohibiting loan Servicers from reducing real estate commissions from less than the negotiated rate unless that rate exceeds 6%. CLICK HERE to go the Fannie Mae site then SEARCH for Announcement 09-03. I cannot link it. You do not need to login to search. The house my buyer purchased did not have a Fannie Mae loan. So what Bank of America did in cutting our real estate commission was not illegal.
None of the politicians in Washington (The Congress, The Senate, and neither the Bush nor the Obama Administration) have done anything to protect Realtors from the conduct of screwing Realtors out of their commissions. It goes on all the time.
I don't have a wife and kids to hold up and say to Bank of America "You are taking food from my family." But I am not getting what I was offered by the listing Realtor. And he is not getting what he and I both earned. Short sales are neither short nor easy. Conduct by big banks like Bank of America that got Billions of Dollars from the federal government should not be permitted.
I created a little Petition to Congress that you can sign if you agree with me that such conduct ought not to be permitted. PLEASE GO HERE TO SIGN.
It won't make a damned bit of difference however. I know it. Bank of America is too big to fail and too big to be put in its place.
