Cutting Edge Insights
with Dr. Lee

Banks, SMH!

I actually was almost finished with the original article I was writing this week when circumstances shifted my course 180 degrees.

I could not let this experience – well, these experiences…go unchronicled.

The labor market has been thin for the past 18+ months – that’s old news.

Bless anyone who is willing to hold down a job.

Bless the employers who persevere and provide the best customer service of which they are capable. And for their patience and ability and willingness to train. And retrain.

And bless the customers for their patience and understanding.

I wanted to call a bank today for 2 reasons:

  1. It had erroneously paid a property tax bill on one of my properties and I needed to get that cleared up.
  2. I am considering selling a commercial property in a small town (let’s call it town 1) in which Bank A (or is it B, or is it C?) has a fairly prominent footprint.  At the advice of fellow real estate developers and friends, I wanted to speak with a commercial lender at this particular bank branch to determine

a) whether this type of property finance was in their wheelhouse

so that

b) I could determine what the purchase would look like for an interested buyer

ensuring that

c) I could market the property effectively and be able to confidently project a buyer’s cash-on-cash investment return.

Back to the property tax fiasco for a moment:

Bank A definitely merged with Bank B sometime in 2020.  Before the merger, I purchased a piece of vacant land in another small town (let’s call it town 2) from Bank A.  I owned existing vacant land immediately adjacent to their property and had noticed that their branch property was large – approximately 3 acres in size – and given the various mergers and acquisitions that were going on, it wasn’t likely that they would ever need or want the northernmost 2 acres.

Not to mention continue to pay to have it mowed and continue to shoulder that expense called property taxes.

Doubling my parcel from 2 to 4 acres vastly enhanced the development possibilities.

I worked my way up the ladder, speaking first with the local president of Bank A, then with regional people, until we came to a verbal agreement.

Q:  How did you determine the value of the property you purchased?

A:  I told them I had paid $ X dollars per acre on the adjacent property, and I could think of no better metric than the same per-acre price for their property.

Q:  This sounds like the comps (comparable sales) game, that’s exactly what banks use for determining our home values!

A:  Now you’re catching on.

As you may imagine, it took some time to consummate and close the sale.  The 2020 pandemic didn’t help.

Ironically, immediately after closing, Bank A merged with Bank B.  The sign in town 2 changed overnight.

Then, seemingly a month or two later, I had heard that Bank B was merging with Bank C.

Q:  The sign people must love banks!

A:  No kidding.

This was summer of 2020.  The summer tax bill was paid with the close of escrow.  The next property tax bill was winter 2021, which (here in Michigan) is distributed the first week of December and is due in February.  I paid that without incident.

Fast forward to summer 2021.

In order to get myself organized, I visited my county’s online GIS website to verify parcel numbers, addresses, property tax amounts, and city treasurer office addresses.

Sardonically, I noticed that the property tax bill for the parcel I had purchased from the bank had already been paid. 

That’s interesting.

Q:  Michigan law states that once a property tax payment is processed and applied to a parcel, there is no adjustment, refund, or transfer of the payment to a different parcel! Even if done in error!

A:  Yep.

Anyway, I called the treasurer in town 2 to investigate and the first response was that I had paid the property taxes in question.

I then asked for the check number.

She proceeded to give me an 8-digit number.

“But I’m only on check number 386 for that entity,” I replied.

After doing further digging, the treasurer confirmed that the bank had indeed paid the bill on my parcel. Formerly their parcel. (Wait, it was Bank A’s parcel – are we on B or C now?)

Q:  Nice scam you have going there!

A:  It will have to be made right. Real estate developers need to sleep at night.

“Makes me laugh, makes me cry, makes me shake my head and sigh” – Bruce Hornsby.

I then wondered how many phone calls and how much of my time it would take to clear this up and make the bank (now in Bank C stage) whole on this thing.

Fast forward a couple of days to today, when I thought about calling and inquiring about commercial loans to effectively market the property in town 1…perhaps I could also start the “make the bank whole for their erroneous payment” process.

I initially had trouble finding a phone number for Bank C in town 1…

So I called Bank C’s national 1-800 number.

“Please give me your phone number or your Social Security number so I can look up your account,” the operator said.

“I don’t have an account with you,” I said.  “What is the phone number of your branch in (town 1)?

“We don’t have a branch in (town 1)” was the reply.

“Aren’t you merging with (Bank B) ?” 

“Yes, but that’s not final until October 13th, 2021.”

“Oh.”

I then looked up Bank B.  And called their national 1-800 number.

“Welcome to Bank B, now a part of Bank C’s network.”

{WHAT?}

“Please give me your phone number or your Social Security number so I can look up your account,” the operator said.

“I don’t have an account with you,” I stated.  “What is the phone number of your branch in (town 1)?”

He gave it to me.

I dialed it.

I thought asking for a commercial loan person was a less daunting break-the-ice question than “who at your corporate headquarters of thousands of branches pays your corporate property taxes so I can tell them they screwed up?”

So I asked for a commercial loan officer.

“Can you hold for a moment?  I’m new and I don’t know.”

You don’t know whether or not you have a commercial loan officer? 

I mean, “Sure.”

Minutes later, a reply of “I’m not sure.”

“You don’t know whether or not you have a commercial loan officer physically present in your building?”

“I’m sorry, I think I asked my manager the wrong question.”

Minutes later, “Can I have her call you back?  We have several customers in the bank at this time.”

“Sure, does she have a name?  So I know whom I am expecting to call.”

60 minutes later, still waiting.

Not one thing accomplished, other than the accumulation of great ammunition for an article we’ve all wanted to write at some point.

I’m not picking on banks.  I like banks.  I like credit unions too.  I like anyone who will loan me money at a low rate of interest and at a fixed rate for a long time.

I don’t like banks when property values decrease in a recession and they say “You have to write us a check for (insert 6-figure number here) to make up the difference” (between what I owe and what some appraiser says it’s worth) and I say “Ye may ask, but ye shall not receive” (I mean, I didn’t have an extra $500K in the recession) and then they get pissed off and transfer me to their distressed assets department and treat me like an outlaw.

Yes, that happened during and subsequent to the 2008-2009 recession.  For more of the spicy details, revisit my chapter in the book Desire, Discipline, Determination: Lessons from Bold Thought Leaders here.

I like to use debt to debase and undermine inflation.  Inflation is going to be here anyway; you may as well exploit it for your own gain.

As you think about that, consider the staffing dilemmas caused in part by the pandemic and exacerbated by the way that helicopter money was disseminated therein.

Always be patient and maintain composure, recognizing that at least you are dealing with someone who actually showed up for work. Whether they wanted to or not.

Maybe I’m speaking to myself with that advice.

For more information on how you can use leverage to create monthly cash flow and how to harness the greatest investment the world has ever invented, download our eBook immediately below.

For the story’s conclusion, stay tuned…I can’t promise it will be next week.

Until next time,

Dr. Lee Newton

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