Home Buying in Phoenix>Question Details

Laura, Real Estate Pro in Phoenix, AZ

I have a few questions & want to double check & make sure I am doing the right thing.

Asked by Laura, Phoenix, AZ Sun May 22, 2011

My buyers agent has contradicted herself many times & I don't trust that she knows what she's doing.

I have made an offer on a Fannie Mea Foreclosure. Fannie Mea has accepted the offer & has sent an additional addendum that over rides the contract. I do not agree with everything in the addendum. My understanding is that I sign the addendum anyway, even though there a some things I don't agree with, then add an additional addendum with the things I want changed. Then even though I signed their addendum, it can not be enforced unless they agree to my additional terms. Is that correct?

Also, the addendum takes away every right I could possibly have. It says even if they make a mistake in any way, or give me false info, I have no recourse. Is that even legal? Is this addendum standard for Fannie Mea?

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Laura:

Q: My buyers agent has contradicted herself many times & I don't trust that she knows what she's doing.
A: Sorry to hear that. You need to be totally comfortable with your agent and be able to complete trust them. You are locked in with them for this transaction, but you may want to look at getting a different agent for any future offers – someone with extensive REO experience.

Q: I have made an offer on a Fannie Mea Foreclosure. Fannie Mea has accepted the offer & has sent an additional addendum that over rides the contract.
A: This is normal practice.

Q: I do not agree with everything in the addendum.
A: Doesn’t matter – if you want the house, you sign. If not, move on.

Q: My understanding is that I sign the addendum anyway, even though there a some things I don't agree with, then add an additional addendum with the things I want changed.
A: We have NEVER had Fannie Mae respond positively to an additional addendum changing the terms of their Addendum - and we do a LOT of Fannie Mae transactions.

Q: Then even though I signed their addendum, it can not be enforced unless they agree to my additional terms. Is that correct?
A: No. They will not agree to any changes in their Addendum.

Q: Also, the addendum takes away every right I could possibly have.
A: Correct – this is standard practice – not just for Fannie Mae – but for all REOs.

Q: It says even if they make a mistake in any way, or give me false info, I have no recourse. Is that even legal? Is this addendum standard for Fannie Mea?
A: It is legal because they have specified it in writing and are warning you ahead of time. This is TOTALLY STANDARD. See the following post for more information:

How To Buy An REO – Top 17 Questions Answered
http://www.trulia.com/blog/carl_medford/2009/04/how_to_buy_a…

You made a few comments below:

Q: I noticed in the banks addendum, it says I am waiving my right to the incentive. I have not been told about an incentive. In looking at other Fannie Mea Homes on the market, I see other realtors mention a 3.5% of the purchase amount towards closing & appliances. I asked my buyers agent about this, but have not heard back from her.
A: The incentive must be clearly stated in the MLS for that specific property – it is not automatic. They also offer a 2-year home warranty on some of their homes. Your agent should have known this and built it into the offer.

Q: I still plan to send an addendum of my own. Mainly to change the COE date, & to say I do not waive my right to the things in 1g, (like appliances, etc...).
A: Good luck with that. You agent should have specified a 45 day COE in the offer – you can always close early, but you will have a VERY hard time getting an extension without a very good reason. Fannie Mae has been known to slam the door on a transaction for going over their stated amount of time.

Q: I don't think I'm asking for a lot, plus my offer is very generous, so we will see if they shoot me down, or are reasonable people. It doesn't hurt to ask. If they turn it down, then it's not meant to be. The worst they can say is no. I will brace for the worst, but pray for the best & let you know how it turns out.
A: Doesn’t matter if you think your requests are reasonable or not.
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1 vote Thank Flag Link Mon May 23, 2011
Laura,

I specialize in FannieMae HomePath financing. I do a great deal of the HomePath Renovation Loans in particular. This is not a surprise. EVERY FM contract that I get with my clients has a counter and YES, it almost takes away your rights. You MUST use their title company, you MUST close by said date or X amount fee per day, you MUST etc... etc...

FannieMae however, has honored their contracts, worked with buyers and I have even seen them lower sales prices when extra work was discovered or extend closing dates. In general, this form does give them the hammer, but they are in the business to move their foreclosure assets and want to work with you, not hogtie you.

btw, if you would like a competitive/comparative HomePath Financing quote, I would be delighted to do so.

Best of luck,
b
Web Reference: http://www.203kworld.com
1 vote Thank Flag Link Mon May 23, 2011
Laura

When buying a bank owned property, you are at the mercy of the bank, whether it be Fannie Mae or any other bank. All of them strip out any rights you have. That is a huge pet peeve of mine and I advise my clients not to sign anything they are not comfortable with. It is a contract and that Fannie addendum is heavily stilted in their favor. Can they do it legally? I am not an attorney but it probably is legal. However, I don't think their addendum has ever been tested in court as that would be a time consuming and expensive process. Most people don't have the resources necessary for a prolonged court battle. Most banks will not agree to any changes and neither does Fannie Mae.

If you decide to go forward, then make sure you purchase a home warranty from a reputable company and made sure it is a no fault warranty. Ensure your agent requests a warranty for a foreclosed home. Some companies even provide a free lock change service. Absolutely use this service as you have no idea who has keys to that property.

In Arizona, there are lots and lots of property on the market so you do not have to purchase a bank owned property. A short sale might be better for you in that the owner is still involved in the process. The owner may not be able to make repairs but you can get a seller property disclosure and the seller is obligated to disclose material defects. The seller warranties would remain intact unless you sign an As Is Addendum.

Again I am not an attorney and you should definitely consult legal counsel. If you are not comfortable with your agent, let me be blunt and say, get another agent. If you signed a buyer broker agreement, you will need to ask your agent to release you from that agreement.

Buying a house is a huge investment and a very complicated process. Keep asking questions, it's important. I hope you find this helpful.

Fred Shocklie
Owner and Real Estate Consultant
623-505-4585, ext. 611
Web Reference: http://www.morechoices.net
1 vote Thank Flag Link Sun May 22, 2011
Laura

Don't sign something you don't agree with, ask your agent to clarify the issue or get it changed so that it is correct.

Fannie Mae does have standard Addendums and I doubt you will be successful in getting the language changed.
Web Reference: http://Www.mcvinua.com
1 vote Thank Flag Link Sun May 22, 2011
Laura if you feel you are being treated unfairly you need to go to the Arizona Real Estate Department website. You can look up your agent and see who her/his broker is. Talk to the broker and then decide if you want to file a complaint. Complaint forms are on the Arizona Department of Real Estate website.
Web Reference: http://www.re.state.az.us/
0 votes Thank Flag Link Tue May 24, 2011
When the government is the owner, there is not much about the deal that will make sense. It's just how it is.
0 votes Thank Flag Link Mon May 23, 2011
Laura:

On a number of occasions we’ve been able to convince REO asset managers that the timelines start when we get the ratified contract back from the bank … however, this has not always been the case. Sometimes we’re told that the contract begins on the stated day even though we don’t have signed docs – and to go ahead and order inspections anyway. It’s not a nice solution and is part of the overall issues you can encounter when dealing with REOs.

It’s why you really need an experienced agent on your side.

In one case, we ordered inspections because we had an email confirmation of acceptance, 7 day Inspection Contingency period (mandated by the bank in the Addendum) AND an edict from the bank to get going right away because they were using the Addendum generation date as the contract date – not the date signed (even though the signed docs had not yet come back), only to find out, AFTER the inspections had been performed, that the bank had ultimately rejected our offer – even though they had instructed the listing agent to communicate acceptance. In that case, we were able to convince the listing agent that it was in his best interest to pay for the inspections.

As for dragging their feet, count on it. It’s part of the curse of REOs.
.
0 votes Thank Flag Link Mon May 23, 2011
Thank you Carl for the very detailed response. I am a detailed person myself & appreciate it.

With the COE, I would not be asking for an extension. Since Fannie Mae has taken so long to respond in the past, I am not comfortable with a set COE date, as it could possibly cut off my home inspection time if they drag their feet. I would like it to say 12 days from agreement date. Which would make the COE happen faster than the date of June 10 that they want to set, as long as they don't drag their feet again.
0 votes Thank Flag Link Mon May 23, 2011
Thank you everyone for answering. It helps to get feedback from other realtors. Especially those of you who do a lot of business with Fannie Mea. I still plan to send an addendum of my own. Mainly to change the COE date, & to say I do not waive my right to the things in 1g, (like appliances, etc...). I don't think I'm asking for a lot, plus my offer is very generous, so we will see if they shoot me down, or are reasonable people. It doesn't hurt to ask. If they turn it down, then it's not meant to be. The worst they can say is no. I will brace for the worst, but pray for the best & let you know how it turns out.

Just to confirm what some of you have said, I need to send only my new addendum, & hold onto their addendum until we are in total agreement. Correct?

I noticed in the banks addendum, it says I am waiving my right to the incentive. I have not been told about an incentive. In looking at other Fannie Mea Homes on the market, I see other realtors mention a 3.5% of the purchase amount towards closing & appliances. I asked my buyers agent about this, but have not heard back from her.

My current buyers agent contradicts herself a lot, & has told me things that I know for a fact aren't true. She also is not helping me get the best deal possible. Like telling me about incentives, etc....I signed the agency disclosure, but I read it again & do not see anything that says I can't fire her. I would like to fire her & bring someone else in that will look out for my interest better. One that knows what they are doing, & will help me & guide me to get the best deal.

P.S. For those of you curious about who "Willy" is, it is Victor Kaminski. As you can see, he is an immature, unprofessional broker who has stalked me for over a year now. He posted on the first question page I created here at Trulia. The question was "How do I deal with a difficult Realtor" (Which is so ironic that it's funny!). Trulia deleted his most outrageous posts that REALLY showed how much of a nut job he is. Victor started arguments with several of the realtors on that page, & when I stepped in to stop it, he went after me too, & we argued for some time. Apparently he can't get over the fact that I made him look really bad. When the moderator stepped in to stop him, he then started attacking her character & talking about this whole conspiracy that was against him. Victor Kaminski is a very imbalanced person with more than a few screws loose. As you can see from looking at "Willys" profile, it is blank & I am the first & only post that was made. Victor created it simply to post here and harass me.
0 votes Thank Flag Link Mon May 23, 2011
Laura, nobody here can provide legal advice. However I can tell you that generally the banks will not modify their addendums. You will either have to agree to their terms or you will have to do a regular purchase (non-foreclosure). On foreclosure you trade a lot of your rights, disclosures, etc.. for a lower price. For some that trade-off is worht it, for some it is not.

Carlos J. Ramírez, PC, ABR, CNE
RealtorCarlos@gmail.com
Associate Broker/Realtor, HomeSmart –
Certified Negotiation Expert (CNE)
http://www.SmartAZRealty.com
0 votes Thank Flag Link Sun May 22, 2011
Dear Laura:

Without seeing what you are signing it is difficult to give an exact answer. However, yes Fannie Mae will ask you to sign their standard addendum after they accept your purchase contract. Also yes, their contract is the governing doc if there is a disagreeement between the two.

You can go to the Fannie Mae website and review their process.

You also have the right and should have your attorney review the docs. For what it is worth, this is the normal process when purchasing a Fannie Mae home or from other lenders for that matter. You still should be in agreement with what you are signing and judge it in relation to the value of the home you are purchasing.

Both parties must sign for the agreements to be binding.

To review the Fannie Mae website and their process: http://www.homepath.com/

Regards,

Jeff Masich, Realtor
HomeSmart Realty
Scottsdale
Web Reference: http://ArizonaHomesLand.com
0 votes Thank Flag Link Sun May 22, 2011
Agree to the addenda that has been added or walk away from the home, there is no give or take as far as the bank is concerned.
0 votes Thank Flag Link Sun May 22, 2011
If you are not comfortable with it do not sign it. Seek out the advice of a professional attorney, whom specializes in this area before hand so that you know you are doing the right thing. Otherwise, you have the option to cancel your offer and find a different property and perhaps agent that you are better suited for. Good luck!
0 votes Thank Flag Link Sun May 22, 2011
Once you sign the addendum, it is enforceable, regardless of whether you propose additional changes. You can send back a second addendum and if they don't sign it, then the first addendum is in full force.
0 votes Thank Flag Link Sun May 22, 2011
Our team lists Fannie Mae properties regularly here in Phoenix, so we are familiar with the Fannie addendum. I am sure what you received is the standard Fannie addendum, no reason yours should be different than the rest of the country. That said, Fannie is inflexible, they rarely will accept changes to their addendum. Unfortunately, what you are looking at is much like the rest of our government, do it the government way or go somewhere else and do business. At least in this case you can go somewhere else, with some of our government agencies you have no choice. ( Won't bother to mention the obvious one )
We rarely see a buyer encounter a problem as a result of the Fannie addendum....however.... for your peace of mind, if you are not comfortable with it, by all means don't go with the Fannie property/contract......ask for your earnest money back and look for another home.... there are plenty out there.
0 votes Thank Flag Link Sun May 22, 2011
Hi Laura. Yes, we have the Arizona real estate contract and then the Fannie Mae contract. 99% of the time, I wouldn't worry about the Fannie Mae contract. It is standard and used with every Fannie Mae purchase all over the country. Fannie Mae won't accept changes either. If you are worried about a stipulation in the contract, you could clarify in writing that your earnest money is refundable concerning that stipulation. Good luck.
0 votes Thank Flag Link Sun May 22, 2011
Laura, you say you don't trust her and she doesn't know what she is doing; why did you proceed? You have made an offer and you are contractually obligated! Know that and believe that. Fannie Mea, FHA and a lot of other companies have ADDENDUMS. Yes, they are usually inflexible about them. I would opine that they have been scrutenized by government lawyers as to their content, but if you are suspicious, take it to a Real Estate Attorney before signing it. We Agents tell clients that we are not Tax Professionals and we are not Lawyers. It sounds like you need legal representation, at least for your peace of mind.
0 votes Thank Flag Link Sun May 22, 2011
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