Yesterday I faced a common dilemma for business; was it better to give my services away and have my customer leave the transaction happy or make a profit and risk a potential failed sale?
Let me first explain the circumstances. I had received a loan application from a couple about 6 weeks ago for a USDA guaranteed loan. In case you don't know, these loans are zero down and the seller is allowed to pay closing costs. The USDA charges a 2% guarantee fee that can be financed. The seller (Metlife) had agreed to pay 5% of the buyers closing cost. We had our work complete in about 2 weeks, including order and receipt of the appraisal and all other required documents, underwriting, and completion of the file per USDA requirements. USDA in our area is overwhelmed to say the least. They took nearly 4 weeks to complete their underwriting for the simple guarantee. The performance (or lack thereof) of the area USDA field office would be a good source for another blog. The delay by the USDA caused us to deliver our docs on the date the contract call for closing instead of a week or so early as is our usual practice.
Here is where the trouble started. The title company was busy when the docs arrived on Friday afternoon and couldn't get the buyers into sign until the following Monday afternoon. The seller, per the purchase agreement, charged a $100 a day late charge, which in this case added up to $400. Additionally, because we were funding in November, the taxes were paid at closing but the buyer had 7 months in tax pro-rations to pay back to the seller which was a month more than I had originally estimated. The title fees ended up being more than customary and there were some HO transfer fees we hadn't anticipated. When everything was all done, the borrowers were required to bring to escrow about $1000. The borrowers are a young married couple, the husband was a laid off engineer. When the escrow officer told them (without my knowledge) that they were going to need to bring in $1,000 they freaked out! They were anticipating bringing in less than $100. This is a small loan and my commission is considerably less than $1000.
What would you have done? Give your services away and maybe have a happy customer or hold you ground, risk alienating the customer and hope they could come up with the extra money? I chose the former. I am not a charity, but I refuse to risk this young couples dream of homeownership over money when I have the power to fix it. I promptly ordered the escrow officer to give the borrowers a $1000 lender credit!
I suppose you are curious what happened next. Yesterday afternoon the borrowers signed their loan documents. They were quickly converted from scared and angry first time buyers to happy homeowners. Today they get the keys to their new condo! I may have worked for free on this one...but it was worth it.
Art Marine
Branch Manager
Academy Mortgage
503-764-4005
www.academymortgage.com/artmarine
art.marine@academymortgage.com
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