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What I learned in Real Estate this week - 11/22/15

By
Real Estate Broker/Owner with Zion Realty

Have you ever confronted a toddler about eating a cookie before dinner only to have them deny the accusation? But what they don't realize is they have chocolate all over their face. Guilty as charged, they refuse to admit their wrongdoing until you hold a mirror up for them to see their reflection. I had a similar event occur this week with the manager of an escrow agency. 

An agent under my brokerage had been dealing with a nightmare of a transaction the past six weeks. The seller he was representing challenged him and kept him on his toes at every turn. In spite of the obstacles he was able to get the buyer and seller to the closing table only to have a previously negotiated cost on the wrong side of the final settlement statement. Early on in the contract negotiations my agents seller refused to pay for a home warranty and specifically reference the section number and line number of the contract and stated that the home warranty was to be changed to read 'paid for by buyer'. Both parties signed this counter offer which referenced the agreed upon change. The seller did however agree to pay a percentage of the buyers closing costs which also was referenced in all the appropriate sections of the contract and was signed off on by both parties.

As the seller sat down to sign her closing documentation she was surprised to see the home warranty was still listed on her side of the paperwork. She asked the escrow officer to make the correction and referenced the contract counter offer where the change was made.  The escrow agent refused to make the change and informed her that she agreed to contribute a set percentage towards the buyers closing costs and that she, as an escrow agent, was authorized to apply the fee wherever needed. No amount of discussion from my agent or the seller was able to convince the escrow officer that the closing statement was incorrect and the file was sent to be recorded. 

When I finally received my copy of the closing statement the seller was still incorrectly charged for the home warranty fee. I placed a call to the escrow agent in an attempt to have the seller reimbursed for the mishandled charge. Despite my attempt to walk the escrow officer through the contract which defined the closing costs and where they needed to be applied, the escrow representative doubled down on their insistence that they were correct and nothing further could be done.  

In a further attempt to resolve this egregious error, I drafted an email to the escrow officer, and copied the seller, my agent, and the buyers agent. I outlined the pages, sections and line numbers of the contract and the terms the parties negotiated. I also included a link from the Department of Real Estate and NAR where they specifically outline the Residential Resale Contract and define what are considered allowable Seller Concession charges, and what costs are not allowed (the home warranty being the first non-allowable example they list).

Wouldn't you know, two days later I received a response from the escrow company advising me that their senior legal council had reviewed the transaction and would be fully refunding the seller for the incorrect charge. So what did I learn in real estate this week? I learned the importance of knowing contract language in regards to legal definitions and intent. I also learned that whenever faced with a difficult individual, relying on years of experience in how to handle these types of challenging situations will almost always result in a positive outcome. 

If you or someone you know are interested in purchasing or selling real estate in Gilbert, Arizona or the East Valley contact us at ZionRealtyAZ.com. We know Arizona real estate law and will fight for your rights as a buyer or seller. 

Comments (38)

David Alan Baker | Laveen & South Phoenix Realtor
Keller Williams Realty Phoenix - Laveen, AZ
Your local Expert

Kinda of surprised that they gave you so much trouble on it, appears that is should have been easier to deal with, instead of the lengths you went to.

Nov 23, 2015 02:22 AM
John Ferrin
HomeSmart - Gilbert, AZ
Realtor

I know you are too professional to name names, but I wish you would so us local guys could steer clear.  Great post and way to have your agent/clients back!

Nov 23, 2015 02:39 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

You would think the first thing that escrow officer would have done in the light of the disagreement would be to contact the title company's lawyers for an opinion. What took her so long to do that? Well, not every escrow officer knows what's what. Good thing you do.

Nov 23, 2015 02:40 AM
Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Haven Express @ Keller Williams Arizona Realty

Care to share?  Sounds like something to be avoided...

Nov 23, 2015 02:44 AM
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Congratulations on winning for your agent's client. If it's in the contract, seems clear. It's not pleasant working with an escrow agent who has an attitude. 

Nov 23, 2015 03:20 AM
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

Wow - that's pretty outrageous for an escrow company!

Nov 23, 2015 04:10 AM
Bill Reddington
Re/max By The Sea - Destin, FL
Destin Florida Real Estate

If the buyer and the seller agreed I don't understand the issue with the closing agent. Not their job. Looks to me like your closing agent changed next time.

Nov 23, 2015 05:28 AM
Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ
602-380-4886

Nicole the fact that it was written out specifically on a counter offer stating the seller would not pay for home warranty and both parties signed off on it made it official. For goodness sakes.....how crazy is that title company....ridiculous.

Nov 23, 2015 05:51 AM
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

It is nice you stayed so firm and put forth such an effort. My first thought would have been to not have the client sign until they fixed it, especially if the buyer and their agent agreed.  

Nov 23, 2015 05:53 AM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Beth - Perhaps this is an industry wide problem!

David - It was just wrong and I wasn't about to let my agent take heat from their client when they did everything correctly. 

John - I'll message you the company.

Liz - I was pretty astonished that they dismissed my agent, the seller, and myself until I escalated it. 

T & S - I'll message you along with John. 

Pamela - It's been a while since I needed to make such a stink over a closing. 

Nov 23, 2015 06:22 AM
John Ferrin

Got your message. No idea how to respond to it so I will just say "Thanks" here.

Nov 23, 2015 10:13 AM
Sheri Sperry - MCNE®
Coldwell Banker Realty - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Good Story - Perseverance always pays off in the end. Have a great holiday!

Nov 23, 2015 06:24 AM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Francine - I was astonished that they did not follow the contract as a neutral third party.

Bill - I couldn't understand it either which is why I was so taken back.

Anna - What makes it worse is that it was written in two different areas of the contract! It specifically stated "home warranty to be paid for by the buyer". I was simply beside myself when the escrow agent wouldn't correct it. 

Scott - I got involved too late. My agent contacted me after the escrow agent had already railroaded over them and then sent it to record. I did advise my agent that next time, don't have their client sign until they call me but there won't be a next time for me and this title agency. I won't work with them again. 

Nov 23, 2015 06:28 AM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Sheri - Generally yes, but I certainly would have rather the escrow agent follow the contract in the first place. 

Nov 23, 2015 06:34 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I'm amazed at the mistakes made by escrow officers, it's pretty simple to read contracts. 

Nov 23, 2015 09:44 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

This is another reason that I want...  no insist on  seeing the closing statement PRIOR to closing.

Congratulations on your follow through.

Nov 23, 2015 10:55 AM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for sharing the story. I like to see the closing statement in advance and have often had them correct errors.

Nov 23, 2015 08:13 PM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Karen - I know they have a lot to sort through but when we go to great lengths to negotiate and write the contracts that list specifics like "buyer to pay for home warranty" you'd think that would be simple enough to interpret. 

Margaret - My agent just got me involved too late. Next time they know to not allow it to record before calling me. 

Gita - I think the escrow agent would have been just as argumentative had I gotten involvd earlier but at least we could have refused to sign unless it was corrected. 

Nov 23, 2015 10:51 PM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hi Nicole -- knowing our local purchase agreements/contracts is so important -- good for you and I'm sure your clients appreciate this knowledge.  

Nov 23, 2015 11:46 PM
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Eighteen Years Experience in Brevard County

And that is exactly why you hire a good agent who earns their money - every penny of it. Well done!

Nov 24, 2015 01:28 AM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Michael - My agent and his client both appreciated it most definitely!

Gary - Individuals who want to navigate a real estate transaction without professional guidance are just asking for trouble like this. 

Nov 24, 2015 12:14 PM