Bank Foreclosure Sale Contracts Are Unethical

by Joe Trometer
(Michigan)

Bank Owned Homes

Bank Owned Homes

I wrote an offer on a Bank Foreclosure...

The Bank countered my offer...

I accepted the countered offer...

The Bank reneges on the contract.
Definition of renege: To go back on a promise or commitment

These are contracts!

One hour after I accepted the Bank's counter offer, my Broker calls me back and says, "The Bank just received another offer and wants an addendum for highest and best offer for multiple offers".

In my opinion, Bank foreclosures are unethical in honoring written contracts. I accepted the Bank's counter offer contract...

... I feel the contract should be honored!

My Broker says, "There is no rhyme or reason for what the Banks are doing with their contract offers!"
Banks get away with what ever they want with a contract... Honor them or not without recourse.
Why bother writing contracts?

"Breach of contract", is what I say. It is corrupt to submit a contract that is not binding, verbal or written!


A "Letter of Intent" is an inquiry without commitment to see if a contract is in order to pursue.

Specific Performance of Contract...

There were ethics in contract law to honor contracts or suffer the consequences when the terms of the contract are not met.

With Foreclosed Homes, for some reason Banks are NOT,
honoring written contracts,
following contract ethics,
and ignore the set of principles of a system of moral standards for writing contracts.

What Can I Do About This?

NOTHING!

It would be a waste of time and money to try to go to Court for specific performance of a contract with a Bank on a foreclosed home.
It would cost more than the foreclosed home is worth in Court costs to try to sue a bank for breach of contract.

This Is Not The First Time

In the last five years of making offers on foreclosed homes, Banks are doing whatever they want!

I had an accepted offer at two-thousand dollars over asking price and two days later the Bank cancelled my contract and accepted a different offer. Is that fair? Absolutely not!

It's A Numbers Game

I continue to make offers...

"I win some, lose some, and the goal is to win more than I lose!"

I keep to my standards of not falling in love with a property!

I set my limit of what I'm willing to pay and never exceed my limit.

When Banks do not follow standard ethics for contracts, I withdraw my offer and move on to the next.

It's a shame that we Taxpayers have to pay to support unethical Bank proceedings, but that's not going to ever change!

I Stay Positive

Real estate investing is full of Trickery.
Strategy is our best offense and defense to work within the system we have. Find those strategies here on Ask-The-Rehabber.com.

The way I do my home remodeling is to buy an investment house to stay in the game of rehabbing houses, so...

When in doubt, keep making offers!


Joe Trometer

P.S. If this has happened to you, we would love to here about it. Click the link below to add your comments.

Comments for Bank Foreclosure Sale Contracts Are Unethical

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Rating
starstarstarstarstar 		Great article
by: Kimberly G. Couch

I will be content to help save this web site in to our folder. Many thanks! The way you express yourself is awesome.Hey, your blog is great.



shopkeeper
Rating
starstarstarstarstar 		Unethical forclosure
by: Anonymous

I came across 2.5 acres with a home on it that had been sitting empty for over a year. Many repairs to be made. This property has never had an offer. I put in a cash offer. The bank stated to me they were rejecting the offer and then added another $25,000.00 to the original price. I know you can not do much but I did find out that you can report them for being unethical. Report it to the Office of comptroller of the currency. The act of deceptive acts under 227.14 act. At least some atttention will be brought to the bank. Not much else you can do.
Rating
starstarstarstarstar 		Bank Trying To Sell Property They Do Not Own
by: Tracy

I stumbled across your website while researching any recourse we can take against the bank we presently have a contract with.

We put an offer on a foreclosure and 14 acres. After negotiating, we reached an agreement and all parties signed a contract.

We paid for a survey and appraisal for the home and the 2 adjacent lots described in our contract.

The only problem is, the bank doesn't even own the adjacent lots... They were trying to sell someone else's property. It's owned and listed for sale by someone else.

Still trying to figure out what steps to take next. The bank missed it. The listing agent missed it. We're 5 weeks into the contract and the title company has just brought this to everyone's attention.
Any advice?

---

Welcome Tracy.

Did you lose the whole real estate deal and lose your earnest money deposit?

Or...

Would you like to remedy the oversight and salvage the property purchase,
with or without the extra two lots?


To take recourse against the Bank for damages, Please consult a real estate
Attorney.

We take for granted when working with real estate companies that they've
done their research before listing a property for sale!

However... Notice the disclaimers on all the real estate company's
literature as to the accuracy or inaccuracy of the information provided.

The Bank also has provisions in their addendums to be held harmless
against just about everything, such as,
"The Bank can cancel their contract at any time, for any reason, right up to closing."

Here's what I would do to Go-Forward and make the purchase.

1) Have your Realtor® contact the listing Agent on the two adjoining lots for sale and submit your offer to purchase.

2) At the same time, have your Agent contact your original Seller's
Agent,
remove the two lots from the purchase price,
3) Extend the inspection period to allow time for the new offer to be accepted,
and,
4) Adjust the purchase price of the original purchase offer accordingly.

The original seller can reduce their price
on the fourteen acres,
if the selling price of the adjacent lots are higher priced than what your original Seller accepted.

If the second seller on the two vacant lots accepts your offer...
...Problem solved!

It sounds like this deal can be salvage in whole or in part.

With the cooperation of the Three Realtors® and Two Sellers,
I would say they are lucky to have you as a Buyer and should be willing to work with you in any way they can to close this deal.

Keeping a positive outlook, we hope this mistake is not intentional and,
no action of recourse need be taken.

Please let us know how this turns out.

What do you think? Any helpful comments for Tracy, click on the links to comment...
Rating
starstarstarstarstar 		Bank Foreclosure Addendum Clause
by: Cathy

I am a real estate Broker.

I can understand your frustration about making offers on Bank foreclosed homes being unethical however, it is legal!

The Bank addendum on the purchase offer include a clause that, "The Bank can cancel the contract at anytime for any reason".

I've had Buyers' Attorneys cross out that "cancellation clause", and the Bank simply does not accept the Buyer's offer.

True, the Banks are using less than normal contract procedures, but there is no law stopping them from writing the contract terminology that best suits the Banks interest.
Rating
starstarstarstarstar 		File A Lien At The Court House
by: Anonymous

Go to the County Court House and file the Purchase Agreement against the home as a Lien!

Let the Bank and Title Company figure it out.

WAYDE

P.s. Revenge: Is a Dish Best Served Cold!


Reply

Thanks for the answer Wayde, very much appreciated.

I would love to take my purchase agreement and file a lien at the Court House,
if only to cause a little stress on the Bank as they cause us!

I called my real estate Broker and asked for the purchase offer with the counter offer and she said she didn't get it.

The Banks are sly....

They want a written contract to make the offer, but the negotiations are verbal.

So, thanks to your advise, on the next offer,
I will ask for all replies to be in writing!

I did have the paper work on the deal swiped away by the Bank from a few years ago, but that deal is long past.

I'm going to repeat this, it's that good!

No More Verbal Negotiations With Banks!

Get All Counter Offers and Contracts From The Bank In Writing!

When the Bank tries to default on a contract for a better offer from a late comer, or worse, Realtors® not following their "Code of Ethics"...

I will do as Wayde suggested!!!

File a lien at the Court House and let the Bank and Title Company figure it out.

This is EXCELLENT!

Thank You Wayde.................

Joe Trometer

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