"But My Friend Says ..." And Other Horror Stories

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Oneta had known the borrower since high school some 35 years earlier. They had been working on the loan for about 2 months to get all of the borrower's documents and the appraisal and everything needed to close this somewhat difficult loan. Oneta really needed this loan to close because she had put much time into it. The borrower, let's call her Jane, was very excited that she could get this loan and had worked hard to overcome some earlier challenges to refinance this home she had inherited from her mother.

Then it happened. The morning of the closing Jane called and told Oneta she would not be going to the closing and they would not be rescheduling ... Jane's boyfriend was putting the kabache on the deal.

Jane's boyfriend.

Janes boyfriend of 6 months.

Jane's boyfriend who was not paying the mortgage.

Jane's boyfriend who is not and would not be on the title.

Jane's boyfriend stopped the deal.

Jane cried. Oneta cried.

About two years later Oneta's twin sister Moleta took a loan application from her good friend's daughter. She ordered the appraisal, got all the documents together, submitted the file to underwriting and the daughter said, "I'm going to Wells they are giving me a better rate."

Of course she would not share the good faith estimate to see how they possibly could have beaten us. In fact it took two years for her to finally confess that at the closing table it cost more than they had told her it would and her payment was higher but since it was a purchase she didn't want to walk away and start over ... she just went ahead and closed because her friend told her that was the right thing to do.

Those are the horror stories and I bet on Active Rain there are tens of thousands just like this. I always put it straight to this bottom line when a customer or client is getting advice from someone else:

What experience does that person have in the industry where you are dealing with professionals? I had someone call the other day demanding to know the YSP on a deal. (A) We're a lender, there is no "YSP" and (B) the loan is priced at PAR so there is no YSP. But her friend assured her we were making thousands. The friend had a little experience, had probably listened to Clark Howard or Ilyse Glink and thought they knew everything.

What motivates the person to give advice? Generally it's pride. Who better to give advice than a know-it-all? They think they know because they may have found some words that fit the vernacular for that industry. If they are giving advice just to puff themselves up they are most likely going to be contrary just to "save you" from the big bad real estate agent or mortgage broker.

Is the friend a competitor to the person who is providing you the professional service? Many people actually prefer not to deal with friends for various reasons. I have not infrequently had someone tell me their brother, cousin, girlfriend, or other, is in the mortgage industry but they don't want them to know their business or handle it. I immediately ask what role that person will be playing in the decision making.

Is the other person a talk show host or journalist with no or little actual experience in the industry? I cringe when I hear some of the things some of those people say. Inaccurate at best and worse if they are intentionally attacking something they don't fully comprehend ... YSP for example. Oddly enough I have never been invited to CNN to address YSP.

There are others to be certain. I would urge you to evaluate their experience and their motivation in providing you information that can cause you to make a mistake by either proceeding or not proceeding. As a real estate investment specialist for the last decade I can tell you I have talked to literally thousands of people who took seminars, read books, listened to programs and came to me insisting they knew more than I did and that I was trying to hold them back (or whatever) only to watch names appear in foreclosure notices (and worse) after I refused to do that deal with them.

Am I perfect? Nope! But with over 3000 deals under my belt I know a lot of mistakes to never make again.


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Comments (50)

Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Sounds like the lady needs assertiveness training. Excuse me for going Psych 101 here, but there is a difference between dependence and reliance. I depend on gravity and I rely on friends. If it doesn't come back the same way I cut and run. To use a current eonomic phrase, the BF is a toxic asset.

May 09, 2009 02:49 AM
Jim Valentine
RE/MAX Realty Affiliates - Gardnerville, NV

Ken, Many people had friends and family that want to "help" them.  Most of those people have read or heard something, but have little personal experience.  I like to talk to the third party influence when I can.  If not, future pace them for the eventuality that someone might say something.  You know what you come up against - prepare them by telling them why it isn't so.  Tell them to call you whenever they, or any of their friends or family, have questions.  If this doesn't work there is a bigger problem in their program, i.e.- someone doesn't want them to buy, wants them to buy something else, use their cousin for a loan, etc.  Thanks for the heads up.

May 09, 2009 03:08 AM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

Of course it is the old bait and switch.

I hate it when those things happen.

We should have a channel here to post those stories, you wouldn't believe....

May 09, 2009 03:12 AM
DeAndrea "Dee Dee" Jones
Found It, LLC - Manassas, VA

Third wheels are the worst, in this market.  Friends and relatives giving wrong information will screw up a transaction every time.

May 09, 2009 03:15 AM
Rebecca Gaujot, Realtor®
Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

This has happened to me a few times...,you want to scream. I just keep quiet until I'm asked for advice...sometimes though, you are not asked.  So be it...

May 09, 2009 03:42 AM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Ken..  I couldn't believe that these things would happen, that loan officers would purposely lie and or bait & switch, especially last minute. Wait, that was a comment from another loan officer here on AR.. lol   Not sure what planet that they are living on.  But what I am finding is that this is happening more this year than it did last year. I think it's because many are still struggling and they'll do most anything to get that deal in. I just lost a past CLIENT, one that purchased last year.. to someone doing a FHA streamline with no appraisal at 4.5% and telling my client that not only will they skip a payment, but that they won't have to bring a penny to the closing table.  OUCH... rut row.  I am not even close on that one... but like $4,000 + off...  yet this guy, my past client, believes the other loan officer because they put it in writing... lol  ANyhoo... I digress as you well know. 

On another note, I would still like to know what the reason was that "jane" was told not to do the deal. Did she use someone else?  What did the 6 month new boyfriend tell her?  ;o(

Ken, we need to keep writing about this, to let borrowers know that this still happens and that it could happen to them. Sure, it's negative and it could scare some, but what they don't know could hurt them more. Just my opinion...  a few loan officers even here on AR think differently. 

jeff belonger

May 09, 2009 04:01 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I know this advise giver.  I did a blog on him/her.  The name is FRED (Failed Real Estate Diagnostics).  This jerk is always getting in the way.  He has cost me some money too.

May 09, 2009 04:21 AM
Sheri Spain
Next Home Team - Raleigh, NC
Wake Co. NC REALTOR Apex to Raleigh to Wake Forest

After 2000 transactions my best friend just took advise from the used car sales man that is was better to get a used minivan at 21% and then try to buy a house.  Well, they just renewed their lease on the 2 bedroom apartment with baby #2 on the way because they no longer qualify for the loan.  If they just waited they could have take the $8k tax credit and paid cash for that van and been in their house!  What do we know any way!!!


May 09, 2009 05:04 AM
Teresa K. Nelson
Compass - Woodinville, WA
Your Trusted Real Estate Advisor

I always tell my clients - especially my first time homebuyers, that once your friends and family learn that you are buying a house, everyone turns into an expert.  I advise them that there is no "stupid" question and remind them that no matter what, I am on their side. I have spent alot of time to put together a great team, and it's all there just for that client's benefit.

May 09, 2009 06:32 AM
Angelia Garcia
Pure Realtors - Dallas, TX

Don't fight it, you win some and you lose some.  I did this past December.

May 09, 2009 08:39 AM
Lee Ali
Las Americas Real Estate - Fairfield, CT

Sheri, I like your story. Good one. :)

May 09, 2009 09:18 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

It's true alot more times than we would like to admit with bad advice coming from friends,boyfriends, etc.  I sometimes wonder if it's possessive jealousy?  They don't have a house and why should you?  They feel left out.  In fact, more women own homes than their boyfriends.

May 09, 2009 09:39 AM
Dave Hymes
RE/MAX Gold - Placerville, CA

The more people that are involved in any decision making process the more problems you're going to have...paralysis by analysis. I have found that I never have problems like this with clients that I've developed a strong rapport with...they trust me. If a client is listening to every supposed "expert", be it friend, relative or acquaintance, there's some degree of lack of trust or confidence. And yes, it's happened to me and it is infuriating.

May 09, 2009 10:00 AM
Robin Turner
Happy House Real Estate - Cocoa Beach, FL
Robin Turner

When they say they want to ask their friend I usually ask which broker they work for. I might know them.

When they realize that their friend isn't involved in the business they usually see the light.



May 10, 2009 06:25 AM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Wow! Thanks everyone for your comments - I have been fairly busy for the last couple of days and came back to this surprise. I wrote this in the hopes a home buyer/owner or two would read it and think twice about taking the advice from people who really have no or very little reason to know what they are talking about including talk show hosts who have little or no experience IN the industry. Training and listening to or reading other people's stories never takes the place of actually being in the trenches.

To the guy who posted a link to a competitor in his comment - feel try again without the link. Your signature is your link.

May 10, 2009 07:06 AM
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Great response and comments.

May 10, 2009 08:07 AM
Dan Magstadt
Paramount Residential Mortgage Group, Inc - Lake City, FL

As a fellow mortgage broker I see this all the time. I really like Robin's comment (#45) - I'll have to start using that line.



May 11, 2009 02:10 AM
Carrie Sampron
Home Smart Realty Group - Highlands Ranch, CO
ABR SFR & Kathy Sampron (303) 931-3629 Highlands R

Wow fabulous stories.  Thanks everyone for sharing.  We've all experienced some form of the "expert" advice coming to play during a transaction.

May 11, 2009 09:41 AM
Steve Mattison
Canyon de Chelly National Mo, AZ
Vietnam Veteran

Ken, I checked with an online Expert "Guru for You" who informed me that you probably made up a part of that blog because they are not friends at all but just acquaintances. ROTFLOL, good blog!!!

May 11, 2009 10:10 AM
Kelsey Barklow
Hurd Realty - Johnson City, TN

So true and often frustrating. It happens to all of us at one time or another. Our "years of experience" should count a little more than a friend's "I have bought and sold four houses". Thanks for the good post.

May 18, 2009 02:56 PM