This is a cautionary tale about being prepared when shopping for a home. Like most Realtors, I almost always ensure that home buyers are pre-qualified prior to showing them any homes. This is for many reasons. I’ve talked before about the fact that Realtors should have a buyer’s information on file prior to meeting for security reasons. There have been many stories in the recent past where Realtors have been attacked by criminals posing as a home buyer. In most of those cases the Realtor had nothing more than a fake name to give to the police. It’s also required before making an offer on a home so it’s obviously better to have it ready so that you can offer on a home when you find “the one”.
There is also a very good reason that a buyer should ensure they are pre-qualified. It could cost you thousands of dollars if you don’t. I recently had a buyer come in from the UK who was looking for a home in Kissimmee. An agent on my team was going to be showing them homes and normally would have required that the buyer provide proof of funds prior to the trip since it was supposed to be a cash purchase. In this case she made an exception because the buyer said he was trying to get his bank to fax over the pof. So off they went to look at homes.
They did find “the one” and decided to make an offer on a home they loved. The buyer was making a cash offer and the seller decided to accept the offer without us providing them with proof of funds based on the promise that the buyer would provide the proof of funds in a couple days when the bank holiday was over.
Fast forward a couple days and the buyer has just now informed us that they actually don’t have cleared funds to close on the transaction and will need to get a foreign national mortgage. Not a good situation for him to be in. He has already made a sizable deposit and now does not have a financing contingency in the contract. Which means if the seller does not agree to extend the closing date to allow time for a mortgage (which is tough for a foreign national to get anyway) then the buyer’s deposit may be forfeit.
The buyer was not up front about the financing situation and as a result will likely lose thousands of dollars because of it. The way I see it there are two morals to this story. First and foremost be upfront when dealing with your Realtor. Second, be prepared ahead of time and take the good advice that the professionals are giving you. This didn’t need to be a problem at all. If the buyer had been pre-approved for a mortgage they could have made a financed offer and things would have been fine.
Image courtesy of amelungc at Flickr.