Anyone ever get an unexpected (or undeserved) windfall on a real estate transaction?

Question

Just curious if anyone has had something similar happen.

Years ago, I purchased a foreclosure from a bank. It was a weird closing that took place at this creepy lawyer's office. When I got there, he wanted me to close "in escrow". I know that in California, they refer to pending deals as "in escrow". Here, if you get to the closing and the bank hasn't sent the deed yet, that's called "in escrow". It happens all the time and it infuriates me. They want you to come in with your money, sign all of the papers, and then leave with nothing and wait for them to get the deed. During that time, you have paid for a house that you can't take possession of. I always tell the title company prior to closing that I will not close in escrow. Several times, I have shown up to closing and been told that we are closing in escrow. When I threaten to leave, the deed magically shows up and we can close.

With this particular closing, the deed had not arrived yet. The creepy lawyer wanted me to sign everything and leave the check with him. I explained to him that I was not leaving $80K with him and not getting any paperwork. He was angry, but oh well. It took about a week for the correct papers to show up and I signed them and handed over the money.

On the closing statement, it showed that the title company was holding $2,300 from the seller's proceeds for the property taxes. Weeks later, I received a check from the city for $2,300. Apparantly, the bank had paid the taxes and the title company paid them also. Being the owner of record, the overage was sent to me by the city.

I figured the bank would figure out their mistake and contact me or the city to get the funds back. I decided that since the money had come from the city, I would only return it to the city and not the mortgage company. I didn't want to have to pay back both if there was some misunderstanding.

I never heard from anyone. Anybody else have something like this happen?

It was like a bank error in my favor from Monopoly.

Rich Weese · Answer

I had one similar to Brian. I was regularly buying on court house steps monthly in Hidalgo County, TX. On one killer home, the bidding continued down to just 2 of us. Super home and large for that area. I knew my bid was low and other party paused for a moment and was on the phone. Property was declared sold and I was ready to go inside and finish paperwork and pay for home. My bid was 241K. All of a sudden, the other bidder starts running after me. He explained that he was bidding for a person that wanted to live in home (next to her family members) , bur she had only authorized him to bid up to 240K. He hadn't been able to reach her quick enough on the phone. He was also bidding for several parties and one was with him. His buyer on my house offered me a 50K increase to 291K. Bidder had 240K and "borrowed" the other 50K from his other party and we went into courthouse, changed buyer to his party and I never removed my money from the briefcase, but just added his 50K to it. Sweet and quick. Not all worked so well. I mentioned on BP that I once bought a foreclosed house at auction that I had been researching- and purchased home turned out to be the home next door..... Story is somewhere here on BP. Rich

Luis Castillo · Answer

I purchased 10 units with $40k and the seller carried back a first for 30 years. When we closed he told me that the tenants were all his friends and he wanted the rents to remain low for at least six months. They were about half of market rents. My first reaction was that he was kidding so half joking I told him I could leave the rents the same for six months if I didn't have to pay him for those months and he quickly said OK.

So I collected $2750 per month for six months without having to make any payments. The loan amount was $190,000 and within a year he agrees to take $150,000 if I paid him early. So I saved another $40,000.

Brian Burke · Answer

I once bought a property at a foreclosure auction, and subsequently contacted the occupant to discuss her "transition from occupancy". She told me that she stopped paying the mortgage because she would rather lose it in foreclosure than allow her estranged (and jailed) husband to receive anything from it. She then offered me around $100K more than I bought it for (not a million $ house, this place was more like 3 hundred grand). And actually closed on it!!  That was 15 years ago, and 500 houses later it hasn't happened again.

Pat L. · Answer

We bought two properties in the last 24 months that had a similar scenario.
the first was a foreclosure that sat for 5 yrs with a number of low ball offers being refused.
It was $58,000 owed. We went in l $21,000 & got it but had mold etc to deal with & we sent them pics to confirm the deteriorating condition.
The taxes were paid for the next year in advance by the Bank.
The next one was a 3600 sq ft mansion built in 1830 on 2 acres near the lake. But it was in immacluate condition.
it was used as a half way home for wayward girls & owed for 25 yrs by the Catholic Missions.
They were unloading it for $69,900 but my buyers wanted it bad & we bid $87,000 beating out all the other low ball  offers. 
The taxes were also prepaid for the next 24 months.

I have a couple more but they are ones that we took back after holding firsts for 5-7 years. The best was a couple who split up & walked away after doing  over a $100,000 in renovations to my old batchelor days home that I sold them.  We paid them  $45,000 cash for keys & they left all the high end appliances !!!!!! & my wife still thinks they would have walked for less???
I love this business & all the surprises it holds.

Tim Czarkowski · Answer

I don't know if this classifies as a windfall because there was some serious heartache involved but it worked out well in the end. I purchased an HOA lien on a property where the buyer had paid cash for it. He was not happy and had to be evicted after the sale. I took pictures after the eviction and called my handyman to clean the place up for sale.

I get a call the next morning from my handyman telling me to call the police and get over there, the condo had been torn up bad. I get over there and he was right, it was bad. All drywall torn down, cabinets ripped off the wall, carpet, floor, bathtub surrounds, and vanities all spray painted, some wiring screwed with, copper torn out of A/C, etc. A real thorough trash job.

The police got there and I got on the phone with my insurance company. Then here comes the previous owner. He tells me he trashed the place and then punched me. Mind you the police are inside the condo and I'm standing a few doors down at another condo purchased similarly. My handyman sees the guy and came running with his gun so he took off, lol. I go get the police and they pull their guns and are looking for this guy. Ends up his brother owns a condo in the complex and is hiding there. The police couldn't do anything because they didn't have proof he was in there. Don't ask me what the assistant DA told me when I went to press charges.

So of course the insurance company is taking forever to let me know what and when I am getting paid. They were going to use estimating software to come up with the settlement so I go ahead pay my contractor to get the place back in shape to be sold and it costs me $10,000. A pretty good deal I thought. About a month later I get a call front he insurance company that their software says it'll cost me $25,000 to fix and that the checks in the mail. Doubled my profit on the deal.

On a side note the brothers condo was in a similar situation, about to be sold for HOA dues. Unfortunately he must have wised up because it still hasn't come to sale. It would have been very satisfying to pick it up.

Lesson to all - Pay your HOA dues if you live in Florida

Nechelle Vanias · Answer

We had an investor wire us $15,000 for the purchase of a property (yes in the early days we had investors send us cash instead of to a the lawyer to be held in escrow, that's just how much our investors trusted us).  When it was time to close on the property, the buyer couldn't be found.  Here we were with $15,000 in our bank account and the buyer wouldn't answer our calls or email.

Not knowing whether he died or was laundering money or what happened, we consulted our lawyer about what to do.  He advised us to tell the bank to reverse the wire, which we did.  There went $15,000 but at least the FBI wasn't busting down our door, lol.

Dawn Anastasi · Answer

When I bought my own home in 2010, up until 2012, I had been receiving a water bill for those 2 years.  What I didn't notice is that it was always for the minimum charge and not for usage.  Apparently the water meter had been broken and so I wound up not paying for usage for 2 years.  Probably only about $400 in savings but it was unexpected.

David Krulac · Answer

I bought a house from the state department of transportation.  They had bought the house to build a highway interchange.  The neighbors protested the interchange design and the state changed the design to skirt the neighborhood and ended up with 2 extar houses that they didn't need to tear down.  They rented the houses for 7 years then by an act of the legislature and signed by the governor, the property was put up for sale at a public auction.

I ended up being the high bidder at the auction and signed their contract, putting 10% deposit and the balance due in 30 days.  I was planning on moving into this house and gave notice to my landlord that I would be moving in 45 days, gave myself an extra 2 weeks to move, and they quickly re-rented my apartment.

30 days comes and the state is not ready to settle.  I'm ready to settle, but they are not.  I went to the state capital and met with the deputy attorney general, who was handling this house sale for the state.  I explained the situation that I was about to become homeless and asked for permission to move into the house, since it was empty and my apartment was re-rented.  He said that they could not let me move in as they didn't have the property insured.  Essentially they were self insured.  I said that insurance was no problem as I had already gotten home owners insurance in anticipation of settling in 30 days, so I had already bought insurance.  The deputy AG said that if I produced a paid insurance policy they would let me move in.

I did and they did.  So I moved in before settlement.  Now the muncipality had a rule/regulation that the sewer and trash bills had to go to the record owner, which was the state.  So the state continued to pay the sewer and trash bills.  And the state had also contracted with a landscaping company to mow the grass as long as they were the owner, so the grass cutting was paid for by the state also.  I did pay for the gas. electric and water.

You'll notice that at no time in my discussions with the state was there vever any mention of rent or mortgage payments.  I thought that we would be settling in a matter of days, and the deputy AG never brought it up either.

I ended up living there rent free and mortgage free for 6 months.  It was then that I decided that this real estate was a pretty good move.

John Mireles · Answer

Here's my story:

Found a great set of three units being sold for less than the market value. To get to the head of the line, I didn't use a buyers agent and went directly to the seller's agent so that he'd get both sides of the commission. My ploy worked and my offer was accepted ahead of a cash offer and a higher offer. (The agent had loaned money on the property so he got to pick the buyer.) To make things easier, I'd agreed to use the agent's loan broker so if there were any problems with the loan process, it would be his guy at fault.

Funny thing happened along the way. The seller countered with $7,000 in cash back that could only be used for closing costs. I didn't ask for it, but what the heck. I'll take free money any day.

Because the $7,000 couldn't be used to get cash back, it was to be used to buy down the interest rate. Great. But when the time came to sign loan docs, I noticed that the rate had not been lowered. I was getting the same deal as though I was going in with no points down.

At that point I realized that the agent and broker had conspired to take off with the extra cash. They figured that I wouldn't catch that the interest rate hadn't been reduced since it wasn't really my money to begin with. Once I realized what was going on, I got the broker on the phone and chewed him out like a regular Al Pacino Scarface. ("F#ck me! No f#ck you!" I swore at the SOB.)

The guy was sweating bullets. He knew he could lose his license  - or even end up in jail. The agent tried to calm me down. Played me like I was a chump. I knew he was in it up to his eyeballs but I couldn't prove anything. Besides, it wasn't his ass on the line since it looked like the loan broker's doing.

Anyhow, the loan broker offered to give me the lower rate and messenger over a cashier's check for $8,000 if that would make me happy. I said it would so he did. Used that to pay for a sparkling new paint job for some pretty kick ass little units.

Robert Steele · Answer

A little off topic but I bought a car from out of state. Utah I believe. It was a lease vehicle. Something to do with the taxes that had been paid there when the car was originally purchased. I got a check from the state for a 1600 a few weeks later. Totally unexpected and a complete windfall.

Anyone ever get an unexpected (or undeserved) windfall on a real estate transaction?

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