Boise Real Estate Blog

Here’s an update on my earlier post about last week’s buyer:

• I researched 57 properties and previewed 11 of them.
• I selected 4 properties that best matched my buyer’s criteria.
• Over the course of the week, two of those four properties sold with multiple offers on each listing.
• I showed my buyers the remaining two properties.
• My buyers made a full-price, all cash, offer on the property they liked best.
• The seller accepted my buyer’s offer as written within two hours.
• I have opened escrow and the home inspection will be done this afternoon.
• We are scheduled to close on 3/11, but will work toward closing sooner.

Closing will be somewhat of a challenge because we must coordinate our closing here with closing the sale of my buyer’s home in another state.
Stay tuned for further updates!

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I recently represented a buyer who purchased a FNMA REO (foreclosure).
This transaction illustrates what can happen if you’re a buyer who wants to buy a foreclosure.
The Property
List price was $214,900, offered “as is”.
The property was 14 years old, in a good neighborhood, but, well  .  .  . 14 years old.
It had light gray linoleum with mauve accents in the entry, kitchen, and nook.
The cabinets were painted white, the countertops were a light gray laminate, and the kitchen had a mixture of original white and almond appliances.
Most buyers would want to update the home with new carpets, hardwood floors in place of linoleum, interior paint, new appliances, and granite countertops.
The lot had a big back yard that sloped down toward the house (remember this fact), which caused me to caution the buyer about the possibility of moisture in the crawlspace.
The Transaction
We wrote an offer for $195,000 with $2,000 earnest money, a pre-approved loan, owner-occupied, $100,000 down, and a 30-day escrow, contingent only upon satisfactory results of a home inspection.
I carefully crafted the offer with language allowing the buyer to withdraw if they deemed inspection results to be unsatisfactory.
FNMA responded verbally with no written counteroffer.  Normal real estate practice is to provide a written counteroffer to facilitate negotiations.
FNMA’s verbal counteroffer was $212,000 and close on 1/14/11, which raised the question of why they would want to wait longer to get their money when the buyers were ready, willing, and able to close sooner?
FNMA also arbitrarily mandated that the property be considered a second home because my buyer was keeping their free and clear home elsewhere while moving to the Boise area.  In doing so, they escaped paying the full amount of selling agent commission they had originally offered me in the listing.
FNMA also required the buyer to sign a blank lead-based paint disclosure, unsigned by FNMA, as a pre-condition of looking at the buyer’s offer.  The property was built after 1978 and thus not subject to the federal law requiring lead-based paint disclosure.
The buyer submitted a second offer at $205,900, which was verbally accepted by FNMA after the offer had legally expired.
It took FNMA several days to provide us with an actual signed copy of the offer along with a rambling 13-page addendum, complete with a scrawled illegible signature and typed initials instead of the usual written initials commonly seen in contracts.
The listing agent was unable to tell me who her FNMA contact was or where they were located and told me that all she could do was “put it in the system”.
We completed the home inspection and the inspector found water in the crawlspace (remember the fact above?), newly-installed vapor barrier, missing foundation insulation on three of the four foundation walls, and two empty one-gallon Clorox jugs in the crawlspace.  All conclusive evidence of someone previously trying to fix an undisclosed mold problem.
There were also other numerous issues found by the inspector; some requiring substantial repairs.
The buyers exercised their right to cancel the transaction in the event they deemed the inspection results to be unsatisfactory.
The Bottom Line
Lots of wasted time, the transaction failed, the buyers spent $300 on a home inspection, the buyers didn’t get the property, and FNMA still owns the property.
Further, FNMA will now be legally required to disclose their knowledge of a material fact (if, in fact, they do so), which will impact the sale price or cause the property to remain unsold.
Meanwhile, we taxpayers are footing the bill for the way FNMA does business because FNMA was taken over by the federal government in September 2008 to keep it afloat.
All of this could have been avoided by FNMA completing a home inspection and providing full disclosure (not required by law for REO properties) up front, or better yet, making the necessary repairs.
If the buyers had purchased this home, their total investment, including purchase price and improvements, would have been roughly equal to that of a well-maintained home being sold by a motivated seller willing to conduct business normally and close escrow.
We are now looking for such a home.
I am confident that I will be able to find it.

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