$59,000 Earnest Money on a Foreclosure..., why is the bank crazy?
Just put in the highest cash bid for a home under foreclosure. Bank accepted my price but wants my earnest money to go from 2% down to $59,000 down!!!! I wanted to close in 10 days, so the bank thinks their time is worth $59,000 if I decide to renig on my contract!?! in a whole whopping 10 days?!!!

Has anyone heard of something so crazy what kind of bank expects over a third in earnest money!

PROBABLY A MISTAKE, I AM GUESSING HERE...........5900, PERHAPS AN EXTRA ZERO. IS PURCHASE PRICE 590K?

I WOULD NOT PUT UP 59 K, NO WAY.

Did not mean to shout, I was in BPO type.

Also, EMD is not a fee to the bank for their time. At closing it is a credit to the buyer. They are just holding you true. I would be nervous about 59k. That would be a fight if it did not close. You might not get the money back.

purchase price is
$160,000.00

Verified over phone the amount of $59,000.00 EMD.

Banks are getting lazy too, they can't even make a written counter offer it was by phone via listing agent.

My father said the same thing, it would be a fight if it did not close.

All of our foreclosure banks want 10% down for cash, 3% for financed. I would have recommended that you counter back at 10% earnest money deposit. Time is on your side. There are a lot more foreclosures coming. It is also common that they counter via phone. They email us but we are not allowed to divulge their contact info so can not forward the email or it in on a web site that we can not give the customer or customer's agent access to.

Like Grampa said, counter back on the EM.

More Drama. I went there today with an inspector to make sure everything was good before agreeing to some super high earnest money and guess what, some people were in the house. I talked to them and the listing agent ALSO told them they were the highest bid and they probably got the deal. Not sure if their offer was Cash or a Loan financed. Listing agent told me that I was the highest offer on Friday at 2:30 pm. Are banks so desperate they need to get their listing agents to tell two different buyers they are both the highest bids? Sorry but this is so messed up. Now I really don't want to increase my earnest money with a bank that is so hungry for money it lies to people. There are more details, about agent supposedly telling other bidder they needed to increase their bid to beat the competition. Isn't this unethical? And why would listing agent only tell one bidder they needed to increase their bid instead of giving everyone the chance to increase their bid? Sorry if this is a rant.

I still find it hard to believe that a lender would require 59K down. Maybe if you were playing games and requested multiple extensions, they had backupp offers on hold.

If all you have stated is accurate, i'm be inclined to think that the Listing Agent is not actually taking the directions from the seller. Why would he/she act in such a way you are wondering? I Hace no idea as to the thought process behind it.

Who knows??

Sounds like the listing broker is trying to double end it and push your deal out. Until you have signed documents and go under contract by the bank in writing YOU HAVE NOTHING. In almost all bank addendums until they are signed by both parties the bank reserves the right to still look at other offers.

Ethics come into play if they are a REALTOR and has nothing to do with license laws or the state real estate commission.

By posting these comments you can tell you are new to purchasing REO. If you don't have a buyers broker now would be a good time to get one.

People think they can always do better on their own until they fall flat on their face.

I double ended an REO last year for almost 22k in commissions. The buyers said they hated buyer agents etc. and I said COME ON DOWN and I will help you write that offer!

what does double end it mean? They want to get the entire comission to themselves? If that is what you are suggesting that is not correct. The other buyer who was told they were also the highest bidder has a buying agent. I do NOT have a buyers agent so if the bank choose them over me the listing agent's comission would theoretically drop from the standard 6% to 3% if it is like most listing agreements.

I think I will require the bank to give me written counter offers form now on. I may be new to buying REO, but my father is an inspector and has bought many homes and has given me good advice so far and others have told me that getting a buyers agent this late in the game is a bad idea.

Should I confront this selling agent teling them that they are not being fair to the entire compitition by telling one seller how much they need to bid to beat the competition?!? I think doing that would just make her/him "forget" to submit my bid, etc.

Thanks for the reply, I appreciate your time.
Still curious,
what does double end it mean?

"my father is an inspector and has bought many homes and has given me good advice so far and others have told me that getting a buyers agent this late in the game is a bad idea."

If your father has all the answers you don't need us.

It seems like you have hit stumbling blocks and are getting nowhere.

No the listing contracts do not go from 6 to 3. Again do not know where you are getting this information. Generally REO's are assigned by asset management companies on behalf of banks and the AM companies take a 1 percent referral fee leaving them 5.0 if they got both sides.

If REO brokers only received 3 for doing both sides there would never be an incentive to market the property. Also by your logic if I was only getting 3 if it was me I would much rather deal with a buyers broker who is in the business and will make my life easier than someone I would have to handhold through the entire process for the same money.

This is why for sale by owners fail. At first they try to sell themselves and 90 percent of the time it doesn't work and when it does sell actual statistics are for a drop of 17 percent less than when sold through an agent. So if you take say 17 percent minus a 6 percent commission a FSBO is taking an 11 percent more hit to their bottom line and having to do all the work selling on their own.

The numbers and the reasoning do not make sense and never will.

So once that fails the FSBO tries to offer a commission to the buyers broker and save on the listing side. Once again this fails because a buyers broker does not want to make 3 percent and do the work of the seller on top of that. They would rather go to a listed property and have the listing agent handle their side of the deal. Eventually the FSBO wises up and lists and prices accordingly and it sells.

The point I am making is there is a lot of misinformation out there about what is accurate and what is not.

I think right now you are a headache for the listing broker and they want to deal with the buyer that is represented for a smoother transaction.

no legal advice-good luck

Double ending refers to the listing agent also bringing the buyer to the table. Then the agent is paid both the listing and buyers agent commission or "double" the usual listing comission. Actually in REO properties the buyer's commission is typically higher that the listing agents commission so it's a net of more than double the $.
REO transactions are very different from typical sales. I actually have not ever had a bank consider an offer from someone not represented by a realtor.
The issues you are describing are very typical in these transactions. The bank addenum contracts typically states they reserve the right to consider other offers. You have not accepted their offer at this time and they are legit in entertaining other offers.
You need a realor who understands REO transactions. You are way over you head. When this deal falls through, take some time to find a Realtor experienced in REO's and they will assist you in locating the best property and successfully executing a contract.

"I think right now you are a headache for the listing broker and they want to deal with the buyer that is represented for a smoother transaction."

Seriously, how can you make such a broad generalization? I've spent a max of 15 minutes on the phone with this listing agent and sent her maybe 4 emails max. If what STEW says is true about double ending than any selling agent would gladly deal with 4 emails and 15 minutes on the phone to make thousands of extra of dollars.

Sorry "super realator", but your logic/comment doesn't make sense.

I think Super was perhaps insinuating you raised a red flag with the Listing agent as being a pain in th batoosie. List agent decided to take the path of lesser resistance.

I think the part of the confusion is we thought you were representing yourself in this transaction. If the listing agent is also serving as your agent (buyer's agent) then the listing agent would be paid both sides of the commission.
If the listiing agent is serving as your agent you should have signed a few forms stating what her responsibilities are to you and she should have prepared the contract you signed and submitted for the seller to consider.
Certainly the listing agent may prefer that the bank accepts an offer that she has both sides on; but the seller (asset manager representing the bank) makes this decision not the realtor. We thought you were representing yourself, which in general is a lot more work for the listing realtor in terms of moving the contract to close with title, etc.
They will act quickly if the first offer they counter to does not agree to their terms and move on to the next offer. They are not required to ask for a "highest and best offer" from everyone. In bank owned sales the bank calls the shots, the buyer accepts or they move on for the most part.

When I escalated my price and put in a revised offer I asked her to be my dual agent on the phone. She/he said technically she/he is the banks representative and had to serve them first. So I pretty much assumed that was an indirect way of saying no.

No agreement was signed between me and the agent. I asked them what I in general could do to make my offer more appealing and she told me generic stuff that most people would know like:
increase price
waive inspection
waive appraisal
increase earnest money
close as soon as possible.

Things I was already considering anyways.

Again thanks for the help. I know everyone is volunteering here! :)

I've increased my earnest money in the counter offer and we'll see what the bank says.

You are non represented in this transaction at this point. I am not sure why the listing agent would not represent you, unless like previous responses she/he doesn't want to bother with dealing with both sides of the sale. I guess some listing realtors feel this way..its not worth the commission on both sides to them if they have to do the work on both sides.

You need a very agressive realtor to represent you and push your offer. As others has said this listing realtor is not interested in a deal with an unrepresented buyer cause she knows she will have to do the work the bueyr's agent usually does, if she wouldn't do that for an additional commission, she surely wont do that for free..

Get a knowledgable Realtor, honestly. Interview a few and hire somebody that will go to bat for you!!!

50% down, wow. I think they accidentally add a zero behind. If I was you, I would walk away of the transaction and send send the asset manager to the doctor.

Happy ending to the story. Bank agreeded to my counter offer and I'll be meeting with the listing agent tomorrow to finish paper work. Thanks for everyone's advice! If you are ever in Charlotte, North Carolina, Look me up on www.couchsurfing.com and I'll take you out for a drink. I'm the only photographer who is verified so that will be an easy way for anyone to find me if they are interested.

Forgot to mention the paper work I got specifically says Selling agent comission is 3% OR $1250
listing comision is 3% or $1250
Im assuming that is a minimum of $1250?

So the previous posts saying that is not how comissions would be split were wrong.

As a buyer, you shouldn't even be concerned about the commission.

Regarding commision splits, just for your information; good for the seller if they are offering a straight 3% to the listing agent. However, although the contract you may have seen reads in this way there is usually a referral fee from the 3% of for example, 1% back to the asset management company that you would not see on a purchase contract. In many cases there are additional fees also deducted from the listing side that would also not be shown in a purchase contract. But again, good for the listing agent if this is not the case.
Congrats on the deal!

Curious Cat, I'm a curious person, I like to know these sorts of things. I'm sure you can relate :)
Stew thanks for the clarification.

Just wondering...how much do you make Charlotte? Put it in writing and scan it, post it, and fax it around so we can all talk about whether or not you're worth it. We might be able to suggest some ways for your boss to save money by doing some of the work you do. Your job is not rocket science after all. I saw on CNN you get paid too much.

None of my business you say. I was just curious...my bad, you're right I'll stuff a sock in it.

If you hire me for a job I'd be glad to let you know how much I am worth. I am good at what I do and I'd also tell you how much the profit margin is for my industry. Hiding the information and acting defensively just turns off customers. Sorry but what you wrote is bad Karma.

In an attempt to make a point I just behaved like you (and other non sellers who are so concerned what my commission is) and butt in to your private business. I don't really want to know what you make. I was being sarcastic. If karma is implememnted in the universe, then I have some sarcasm headed my way. I'll take it when it comes.

Of course it is a buyer's business. What if your comission was 50%? That would force the price of the home up because you are taking such a big piece of the pie. It is also our business because we are paying you. We pay the seller and the seller pays you. No buyer = no comission for you.

Buyers are obviously concerned with comission becuase it is directly related to selling price. Which is what they pay for.

Some buyers even seek out FSBO homes to avoid paying extra comission fees. Sellers try to do FSBO to avoid paying comissions. If the comission was of no concern than these strategies would be pointless.

And by the way, you've got the whole chicken and the egg thing mixed up. People care what they have to pay out of their pockets, which isrelated to what you get paid in comissions. Their first thought is about themselves, not your paycheck.

And its not a big secret what realtors make. I guessed it at the beginning of this post and the paper work confirmed exactly what I guessed.

The buyer has no contractractual obligation with the listing agent. The seller does. The commission is not of any concern to the buyer unless he is nosey.


Using your line of reasoning, I could walk into a delly and ask to see owner to open up the books to justify the price of a sandwich. While I am at it, I could go to the baker and do the same since he made the bread, and the farmer who grew the tomatos, the rancher that raised the livestock, the delivery man that brought the product to the store. Is it my business because I am buying the sandwich. No. I can decide to purchase or not to purchase the sandwich. But I cannot question the store owner about costs without being accused of being nosey.

selling is a game.
no one cares if they are paying $4 or $5 for a sandwich.

People do care if they are buying a car or a boat or a home about how the pie is split up and they ask those types of questions all the time and it is called negotiating. Why do you feel the need to dictate what knowledge can or can't be negotiated? Are you threatened cause I just "beat out" other buyers who supposedly had professional realators helping them while I just read some junk off the net? Who cares!

Realators ask nosy questions all the time. They want to know if I'm married, what I do, what kind of car I drive, how long I've been in the area, etc. I wasn't born last night, that kind of info helps them negoiate for or against me. I'd do the same thing if I were a realtor. So why do you think your industry can ask all kinds of nosy questions yet I can't ask any?

You never hired an agent to tell you what they were making. As far as hiding information, the commission is confidential information between the listing agent and their client. The private information shared by the agent and their client, whether it is the commission, the seller's bottom line, etc is not going to be shared with you, since you are a customer and not a client.

You did have the advice of agents helping you make your offer beat the other offers from buyer represented by agents: the free advice of the agents on this forum. So none of us feel threatened by you.

Charlotte's assertion is ludicrous. Pretend I sue ABC company for damages I incurred due to their gross negligance. My attorney likes my case and takes it for 33% and thinks we can collect 1 million. Neither ABC company nor their lawyer are privy to the deal I have with my lawyer, nor should they be. Can you see ABC company telling their lawyer not to settle for a million, but only as high as 900k, because my lawyer is taking too high of a percentage? Absolutley ridiculous. The suit amount is the suit amount. Decide it on it's merits.

Pretend I have major surgery and rack up 100k in medical bills. After copays and deductables I pay $5000 and the insurance company settles the remainder of the bills with the doctors and the hospital. Since the insurance company is a large player the hospital and the insurance companies settle on a payment of 70000, instead of the owed 95000. Can the patient go back and demand a portion of his $5000 deductable back since the insurance company worked a deal. No way.

I am buying a car. Do I ask the sales guy what he makes so I can get a better deal for myself?

As far as a house goes, the price is the price and you negotiate the price. I am tired of know-too-much folks digging into the commission agents earn, trying to get a better deal for themselves. Like you said Charlotte, hire me and I will tell you what I earn. I might even negotiate with you. Or go FSBO, I care not. Otherwise, the commission is none of your business.

Too nosey.

Charlotte,

Congratulations on getting the house.

For the sake of future buyers who might read this thread, I want to clarify a couple of things.

First, I need to emphasize that there is NO STANDARD commission. Commissions vary. There may be a commission percent which is more common in your area than others, but commissions are negotiable.

Second, I want to elaborate on what STEW said. By looking at the figures on the listing, on your contract, or on the HUD1, you do NOT know how much commission either agent made. You can see TOTAL commission, but you have NO WAY of knowing what the agent(s) made. Commissions are paid to the agencies involved and then split out to agents--part goes to the agency itself and part goes to the agent. The split percentage is not revealed on any of the paperwork in your transaction. In other words, all commissions are actually split four ways. In the case of an REO property, the listing side of the commission is almost always less than the selling side.

If the total commission is 5%, the listing side may be 2% with the selling side 3%. Even in a 2% listing side split, there may be a referral fee that is deducted or otherwise paid by the listing agent--meaning that an REO commission is split three ways on the listing side and two ways on the selling side.

So what you are saying Doin' bpose is that you have never asked your client or potential buyer any personal questions to try to determine what kind of financial condition, time rush or how serious they were with an offer and perhaps if they could offer more money on the property? Arent' those nosey questions that deal directly wtih a person's income? And if so how can you tell others not to ask nosey questions? Double Standards, that is what I'm tired of.

"I am buying a car. Do I ask the sales guy what he makes so I can get a better deal for myself? "

OF COURSE, that is why some people prefer to buy private listings to avoid having to pay for higher costs due to things like staff overhead, comissons, rent, etc.

Other's prefer the knowledge and perks like limited warranties or return policies of a used car dealership.

It's a buyer's choice to learn the differences and negotiate the best deal with who ever they want to buy the car from. Geting insurance or suing someone are not direct analogies because client is not buying a piece of physical property.

This difference we have illustrates my point well.

I always ask these questions. It is the first thing I do. I must ask them to do my job well. I think you might learn more about agency. That is the point of it all. Any client/agent relationship involves this interview process. When clients withhold information it makes agentcy very difficult and often the process becomes futile. It is not a double standard, it is an established relationship. Think teacher/student, apprentice/mentor, daughter/mother.

REO sellers usually more than one reason for wanting a certain price, is the portion attributed to the listing and/or buyers agent commission your only concern for getting the best deal? If so, what if the sales price included a 6%, 8% or 10% loss recovery fee (or something like that) and did not include a commission, how would you react then? Just curious!

Charlotte - If the agent belongs to the Million Dollar Club, they must make a $1,000,000

Simple reasoning

The problem with the Charlotte buyer feels their position is the only one. It's why the argument keeps going on and on.

Basically in this world there are all types of buyers and sellers.

You could walk into a store and one salesman moves away from a particular buyer and another gravitates towards them.

I used to have a funny picture I had as soon as people walked into my car audio business. It said (radio installation 55.00-If you want to HELP 100.00)

The point is I would get people bringing me a car full of wires with THEIR help that I had to tear out and the job took twice as long.

If you are interested so much in real estate you need to get a license.

I love that there are different buyers and sellers out there so I can let someone else have the ones that are too much trouble.

Of course you ask those questions for your own client! I'm not talking about YOUR client, Im talking about the competition!

So when you are representing a buyer don't you try to find out what the seller's motivation is. Are they getting divorced, did they loose their job, when are they moving, how much money do they make and how long can they afford to pay two mortages, etc. All nosey questions that any good buyer's agent would love to get the answers to, to help their clients get a good bid in.

And there's nothing wrong with it at all, it's competitive and keeps people on their toes.

Seems like nosey-ness goes both ways. So no need to bash it.

charlotteNCbuyer: How is your purchase going? Since you made an offer through the listing agent, is it safe to say that you have little experience with a buyer's agent? You have no idea how a buyer's agent could have helped and protected you. For someone who has no trust in an agent's expertise and honesty, however, you sure do seem interested in trying to get free insight from the real estate agents here. Or are you a troll, merely picking fights?

Our business is similar to yours in many ways. Everybody has a camera and believes they can take photos, even portraits. The irony in our business, however, is the very tools that make YOU believe you do not need us (realtor.com, numerous internet sites, newspaper ads, real estate magazines, etc) are the very services that WE pay for through our ads and participation. Selecting a house is a very small part of the process, just as is snapping the shutter. All of the background knowledge, in your business and ours, comes into play at every juncture.

Good luck out there on your own. We have answered "straight-forward" your questions. We do try to help visitors, but you have an attitude that we cannot overcome. Good-bye.

My purchase is going fine. I have a signed contract and a lawyer doing the title work. I have already thanked people on this forum for their insight. I do not appreciate being called Nosey though, saying I have an attitude when I have not personally attacked anyone and think there is a double standard. Also Lizl, you do not speak for other people, the correct pronoun to use is "I" not "We".

Although in the end, it was just a simple matter of me having the best offer out of the competition. In fact there was another offer that was higher than mine by $6000. I know the other buyer had a realator and maybe it required a bank mortgage as well. Personally I think the bank was happy for my cash offer and to not pay the 2.5% commission to a buyers agent and that is why they took my offer, not because I gained some great competitive advantage from this forum. In fact I think if I would of gotten a buyers agent it would of worked against me because the bank would have to pay a comission, making my offer less appealing.

The bank still pays the same amount of commission. The seller offers the Listing agent X amount to sell the property.

The Listing agent offers the buyers agent 1/2 the amount to bring a buyer. Thats an agreement between the two brokers.

If the listing agent finds a buyer he gets the entire amount as bouth the listing angent and the buyers agent.

Also the fact that your cash offer beat an offer contingent on financing/appraisals is the key.

You might have been able to get an even better deal if you had used an experienced buyers agent in your area, but you will never know. It is sad that the bank paid for that buyers agent for you to use to get a better deal and you did not take advantage of the free help.

Like I said some people always feel they can build a better mousetrap and that will never change.

Have a happy closing and I hope it goes well for you.

"but you will never know. It is sad that the bank paid for that buyers agent for you to use to get a better deal and you did not take advantage of the free help."

Exactly what would a buyer's agent do to help make the scenario better? People keep on saying general things, but never say specifically how it could of helped. Seriously was he/she going to somehow call up the listing agent, charm them and find out exactly what I should bid to beat the competition and get me the house for the optimal price.

Because if you really think that is true, you should meet the guy who bid $167,500. I talked to him on the phone and that is EXACTLY what he claimed happened with his bid. He found out the price to beat me and bid it and he lost.

I'm going to ask the seller at closing exactly how this all works because it seems I get just generic answers here.

If you are going to attempt to correct my use of the pronoun "we," I will correct your spelling of the word "Realtor." That, by the way, is a specific term that does not mean the same thing as "real estate agent" and it should be capitalized.

I do have the right to say WE! "We" are the agents on this forum--several of whom did answer your questions. I will not, however, attempt to answer your questions in the future. You are so sure that you have negotiated the best possible deal for yourself that no amount of reason or evidence will convince you that you might be wrong or that there are still potential issues ahead of you. So be it. Even a broken clock has the right time twice a day, so you could be correct.

Folks who have good friends take their wedding photos never know how good the photos could have been. . .

That is such a good point and so relavent to this discussion.

Actually there are some crappy photographers out there and some friends who shoot weddings are better than those that charge $$$ professionally. I can list specific points on what most pro's do better. Pro's generally use flash and combine it with exsisting light better. They have more expensive lenses that allow for better pictures in low light. They can pose people better. They do better album design. Whether these things are worth it or not often depends on the lighting at the venue. Beach weddings are easy for amatures to shoot. Big dark churches are much harder for amatures. I could go on but you get the idea.

Too bad you guys can't list specifically why an agent would of helped me and my situation to make it even better.

Lilz if you want to "burn bridges" over something as minor as some "relazqtor" questions I'd suggest drinking some egg nog to get you in the spirit.

"WE" buyers certainly are happy egg nog or not.

59K in earnest money...my head is still spinning. That is a ridiculous amount of money unless you are buying in the million and up price range.

I say back off of her, she's managed to get it under contract. I think she has great realtor potential. I purchased several properties on my own before I was a Realtor and got screwed only minorly...once took the the listing agents word that the termite inspection was clean after she said it had been misplaced and closing was already in progress.. One year later when I resold it for significant profit-guess what? tenting it was only $1000.00; I still came out way ahead...
There are ethical listing realtors who wont take advantage of unrepresented or dual agent situations; I am one of those people..I just hope she is working with one of these..

Sadly, we could list all the ways that a buyers agent would have helped charlotteNCbuyer but they would just want to argue about that also. But why waste anymore time with someone that just wants to argue?

You got the house. Move on

Yes, CNCB got the house under contract, but we will never know if the deal runs into complications, disappointments, or confusing/confounding aspects that a buyer's agent could have impacted, because he/she is not going to admit (or even know).