Bargains aren't always
Ronald Reagan once said, "The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.'" Recently, we were reminded of how true that statement can be.
As you know, the market now offers a variety of government owned homes. Coupled with government sponsored loan programs and government assistance, the government is involved in the real estate market in a big way.
One would think that a loan originated by a government entity, the United States Department of Agriculture, for a house owned by a Government Sponsored Enterprise (GSE), Fannie Mae, should be a formula for a relatively smooth transaction. Ha! (hence the quote from President Reagan).
The first time homeowners did their homework. They explored financing options to determine the best way to facilitate owning their own, first home. They shopped around, checked out neighborhoods, styles of homes, proximity to services and schools and determined a location that would serve them well. So far, so good.
As they explored active listings they discovered some excellent values in foreclosed properties, as many have in today's market. They looked at several and decided on one that fit their family's needs and made an offer which provided that the seller, Fannie Mae, pay the closing costs. Nothing out of ordinary there.
After some negotiation of price, the offer was accepted so the buyer's exercised their rights to perform due diligence. They hired a home inspector and an appraiser as required by their bank. This to the tune of about $850. Seeing there were no insurmountable repairs needed to the home and since the home appraised at the proper value, they began making plans to take possession of the property they would call home.
Then, less than a week before the scheduled signing that would transfer ownership, they received a call from their Realtor. Fannie Mae was refusing to pay closing costs. "How could that be?" they wondered. After all, the closing costs were detailed in the schedule provided as a standard portion of the Idaho Purchase and Sale Agreement. "Yes, but Fannie Mae says since there was not a dollar amount specified, they are required to pay nothing."
A review by an attorney determined that the contract was indeed enforceable and Fannie Mae had agreed to pay the costs. But, there was a lengthy addendum attached by Fannie Mae and agreed by the buyer, that states in several places that legal action will not, can not, be brought against Fannie Mae for this transaction.
When it was pointed out to Fannie Mae's Realtor that the contract for closing costs was not altered by the Addendum, he informed the Buyer's agent that the addendum "supersedes" the Purchase and Sale Agreement. Oblivious to the fact that an addendum is additional language to be included in the contract, not a document that replaces the contract, Fannie Mae refused to pay the buyer's costs. As you have already guessed, these additional costs put the home out of reach for the buyer so they moved on.
Friday, the buyers took possession of a home they like better, with a cooperative seller and are delighted that Fannie Mae played heavy handed with them, freeing them up to find a home that they will enjoy for many years to come.
Beware. When something seems like a bargain, don't invest too much into it or the emotional price may be overwhelming and cause you to pay too much. Be especially wary if dealing with a government sponsored enterprise that holds themselves above the law before you sign anything absolving them from litigation.
Trust an expert ... call a Realtor. To find a Realtor to represent you visit the Coeur d'Alene Association of Realtors website, www.cdarealtors.com . There you can also search available properties in the Multiple Listing Service.
Kim Cooper is a real estate broker, Realtor and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the Association invite your commentary and feedback. You may contact them by calling 667-0664 or by writing to them at 409 W. Neider, Coeur d'Alene, 83814.