Keller Willams Realty North Central

On [redacted] my girlfriend and I put an offer on a duplex. [redacted] of Keller Williams had it advertised as a BANK APPROVED SHORT SALE. When [redacted] first had shown us the property a few days before, he brought his colleague [redacted] along, and had us sign a disclosure to designate [redacted] as our [redacted] encouraged us to pay $750 out of pocket for an [redacted] Appraisal. The mortgage broker who took this payment, [redacted] of [redacted] was clearly friends with [redacted] and we later found out an [redacted] Appraisal for a duplex is only $550, not $750. The property passed the [redacted] Appraisal, but we kept receiving weekly notifications from [redacted] that we would need to extend the closing date. Every time [redacted] would delay the closing date, she would repeatedly reassure us that everything was fine, and that we just needed to be patient. She NEVER informed us this was NOT a pre-approved short [redacted] also encouraged us to put the gas and electric utilities through [redacted] in my name for a utilities inspection. Now I have a bill from [redacted] for $105.21 because she never told us there was potential that this deal might not go through![redacted] the seller's listing agent, also works for the Keller Williams in Leominster. As first time home buyers, my girlfriend and I trusted that [redacted] was working in our best interests. Clearly this was not the case!On [redacted] we were informed by [redacted] that it wasn't actually an APPROVED short sale, that the sale would not be going through, and that she was not going to reimburse the $855.21 we had invested under her advise. [redacted] has offered to reimburse us our $2,000 deposit, but refuses to correct the $750 [redacted] Appraisal fee and the $105.21 [redacted] bill.The bottom line is:We never would have invested this money if we had known this short sale was NOT pre-approved as had been advertised. We were mislead and misinformed, and we are out $855.21 because of this!Please help!!Desired Settlement$500 (good faith offer)$1500 (purchase and sales)$750 ([redacted] appraisal)$105.21 [redacted]This totals $2,855.21Business Response In [redacted] I met the complainants, when they were interested in looking at a multi-family property at [redacted] in [redacted] At that time I went over and explained to both [redacted] and [redacted], the mandatory consumer relationship disclosure explaining for whom I worked [redacted] Both [redacted] and [redacted] signed their understanding of the disclosure prior to seeing the property. I was excited to be helping them purchase their new home. During the course of showing the property I learned that they were not pre-approved for financing, were not currently working with a lender and they did not like their current banking institution. I sat down with both [redacted] and [redacted] in my office conference room after the viewing and explained to them in detail the short sale process. I relayed to them it could be a lengthy transaction and that there was no guarantee the lending institution on the other end would actually accept either the terms or "new" Buyers even if the transaction had initially been approved. I also specified all sorts of problems that typically come up. One of the most common issues being that if the house is winterized and the utilities and gas are not on, they, as Buyers, would likely need to de-winterize the home and get the utilities turned on. They were both informed that the lender most often will not agree to pay for the de-winterization and re-winterizing process thereafter (though we would obviously try to negotiate that). In fact they were advised with this short sale and many others, though the short sale price had been approved by the seller, as was specified in Purchase and Sale Agreement it was still contingent upon 3rd party (lender)approval. This was clearly explained to them. They were responsible to do everything as the Seller and Lender will frequently not agree to pay for those services. I advised them of this up front, before spending any money on those services, since in short sale situations there is no guarantee that the deal will come to fruition. They both agreed to go ahead with the calculated risk. I gave them the names and contact information of several loan officers that I work with. [redacted] from [redacted] was the only Lender of the several I offered that could offer the type of loan that [redacted] and [redacted] eventually chose based on what they would comfortably qualify for (based on their credit scores, income and available down payment). [redacted] and [redacted] seemed delighted and made the decision to go ahead. We wrote an Offer that was accepted by the Seller and went to Purchase and Sale Agreement. [redacted] and [redacted] put a small down payment deposit on the property and paid for an lender appraisal so that the loan could be approved (As a Realtor, I have nothing to do with this process, it is strictly between loan officer/lender and borrower, AND is necessary to be approved for loan funding.) In order to complete the appraisal the gas and electric also needed to be turned on. At this time, as we did not have a concrete Lender Approval of short sale, though the Seller had already signed off, I once again advised [redacted] and [redacted] that they had 2 options: walk away from the deal or take the calculated risk to move forward, which would require them to put utilities in their name. [redacted] made the decision to call the utility company and turn the utilities on. Shortly after making this decision, and during the follow up for loan approval, [redacted]' mortgage application was denied due to a change in the availability of funds. Apparently circumstances had changed since the initial loan application and lack of closing cost/down payment funds in the bank became an issue. Shortly after this the Seller's lender made a determination that the Sellers would be allowed to sell short based on Hardship, but were going to be required to sign a promissory note in excess of $40,000.00. At this point the Seller decided to not accept the short sale since they would still owe the bank the deficiency. The Short sale did not go through, and unfortunately, [redacted] and [redacted] were unable to qualify for the loan necessary to purchase the property. Working on my clients' behalf, I have gotten a release of Deposit approved for them to receive their initial down payment monies ($2000 total deposits). Though I have reached out numerous times to determine where they would like me to send the deposit monies, I have NEVER gotten any indication as to where to send those funds and continue to stand at the ready. The funds that were spent for appraisals and utilities are services that they inherently made the decision to hire out and I as a Realtor made them aware of before moving forward. In any transaction, home buyers typically have inspection expenses etc... that are Non refundable whether they buy or not...the expenses for getting mortgage approval were expenses that the Buyers took on as a calculated risk in the hopes of eventually purchasing the home. in short sales these are the type of expenses that Buyers risk for the opportunity to get a GREAT deal. I feel badly for [redacted] and [redacted] and understand their frustration that they did not qualify for the mortgage, but the bottom line is he made the decision to pay for an appraisal and put the utilities in his name after being advised that there was a level of risk involved. Consumer Response (The consumer indicated he/she DID NOT accept the response from the business.)[redacted] did not send us a mortgage denial letter until AFTER [redacted] told us this property would not close due to it not really being a "PRE APPROVED short sale", as they had advertised. There was no reason for our denial, other than shiesty politics. We never would have invested hundreds of dollars if we knew this was NOT a pre-approved short sale.Reading this response was the first time I heard anything about paying for dewinterization and rewinterization! I thought I had simply paid for the utilities to be turned on so they could be tested! No wonder this bill is so much! Marcy told me via phone "it would be less than $20 because it wasn't like anyone would be using the gas or the electric."[redacted] also NEVER indicated anything about the seller refusing to sell short because of hardship, and not wanting the burden of the $40,000. I have every email sent and received, and this is what I received:"Hi [redacted]: I tried calling you and texting you a few times today. I hope all is well with you and [redacted]. I know this waiting has been very difficult. I would like to speak with you regarding [redacted] I have some news that I need to speak with you about. Unfortunately I don't believe this transaction will go through. I spoke with [redacted] today and he agrees that this transaction does not looking promising.However, on a positive note there are a few other properties that I think may work well for you. Please call me so that we can discuss further." (Why was she offering to show us other properties if we had a lack of funds?)We have not signed the release of deposit because of false advertising, lack of informed consent, and just plan bad business tactics that costed us $855.21 that they refuse to reimburse us.Final Business Response Our previous response summarizes what occurred during the course of this transaction.Unfortunately not every sale comes to a successful conclusion and there are risks involved in every home purchase. In a 'typical' homeowner to buyer transaction the buyer pays up front expenses for their mortgage application, appraisal and inspections. If any of the inspections aren't satisfactory and the buyer and seller can't agree on repairs or if the mortgage commitment is unacceptable the sale won't proceed. The buyer isn't reimbursed for these expenses if the sale doesn't go through. The home inspector did the inspection and the lender processed the loan. Short Sales have a higher chance of failure because there is third party approval needed from the bank. The bank is not emotionally attached to the outcome and approaches the sale as a business decision. Short Sales are very enticing to buyers because they can usually get a good deal on a house. They are also very stressful and the outcome is uncertain right to the last minute. [redacted] is an experienced agent and all of our agents have been trained to explain the difficulties of a short sale to potential buyers as was described in our initial response. In a short sale, although the owner of record still technically owns the property they need approval from the bank to sell because they owe more money on their mortgage then the property is currently selling for and worth. They can't sell the property and convey a title unless the lender holding the mortgage agrees to the sale. [redacted] and [redacted] were made aware of the need to have Third Party Approval and it was written in both the Offer the Purchase and the Purchase and Sale Agreements that were signed by all parties. It is not unusual in a short sale for neither the bank nor the current owner to take care of the things one would normally expect a seller to do during the sale of their home. The banks don't want to invest any money into a house they don't own and are already losing money on. The owners are losing their home and don't want to do anything at this point. So if the buyers want to try to buy a short sale property they must accept these things and the risks associated with it. This would include turning on and paying for utilities, de-winterizing and re-winterizing the property, paying for a smoke detector certificate and sometimes installing the smoke/CO detectors. If the buyer is going to have a mortgage they would have to pay for the application and appraisal. The bank usually will not process the short sale unless the buyer is going through all the processes. As was stated in our last response this was presented to [redacted] and [redacted] and it was their decision to take these calculated risks. If they hadn't it would have been equivalent to withdrawing their offer since they could not have proceeded with their financing and the short sale bank would have stopped the process. No two short sales are the same. Often by the time a property is being sold as a short sale the owners are also behind in the mortgage payments. If a property previously had an accepted offer and had started the bank approval process the bank may have indicated that they would accept a certain price. When a new buyer submits an offer with an acceptable price the bank will restart the review process. Unbeknownst to the buyer or buyer agent, if the owner is behind on their mortgage payments, another branch of the bank could be starting a foreclosure process at the same time. These two departments in the bank often don't talk to each other or coordinate what is happening. We have had short sale properties be foreclosed on the week of closing after you would have expected everything was done. The short sale process can take anywhere from 6 weeks to 12 months (or more)and is totally unpredictable. It is not until the very end of the process that the bank finally notifies the owner whether they will accept the short sale or not and under what conditions. During this time the home owner and their negotiator will submit a short sale package explaining to the bank why the bank should accept the short sale. These packages can be 50-75 pages long including why there is a hardship and all the sellers financial information. Often the bank ask for various other additional documentation. For this property when the bank finally got back to the owner the acceptance had a condition that required the owner to take back a $40,000.00 promissory note. The owner refused. There was no way of knowing this would happen. At that point [redacted] notified the buyers. She requested the seller sign a deposit release and we are still prepared to release the $2000 escrow deposit to the buyers as soon as they let us know where to send the funds. I empathize with [redacted] and [redacted], they took a risk to get a good deal for this property and unfortunately it didn't work out. ([redacted]Final Consumer Response (The consumer indicated he/she DID NOT accept the response from the business.)How a short sale works is not in question. Keller [redacted]'s services to us is.We were not told that we were dewinterizing and rewinterizing the property. [redacted] told me on the phone it would be about $20 because "it wasn't like the lights and gas would be used much for the inspection". Marcy also told me it would "really speed things up if I put the utilities in my name." She didn't make it sound like there was ANY risk that the purchase could not or would not go through, the emphasis was always on the duration of time! If there had been any inkling that this transaction may not happen, I would not have put the utilities in my name at all.The same goes for the $750 [redacted] inspection. We understood very clearly that if it did not pass inspection we would not be reimbursed the $750. But we did not understand that we might be out this money because the sale might not go through. [redacted] never even hinted that the rug could be pulled out from under our feet AFTER these financial investments were made on our part.A real estate agent is a liaison working on your behalf. That is the service they provide. Their job is to fully explain calculated risks and possible mishaps. I never knew the potential for the plug to be pulled on the whole deal I thought "where there was a will, there was a way" and [redacted] condoned this way of thinking instead of explaining to us "Bank Approved Short Sale" isn't any different than "Short Sale".