Question? What do you think is the best course of action?

By
Real Estate Agent with Aspen Properties, Inc. BR511793000

I have recently heard several schools of thought on an issue and I thought I would see what some of you think and what your opinions are. 

I recently received an offer on one of my listings from a First Time Buyer who was at the very least, minimally qualified to buy a property.  The Buyer had no money to speak of, according to their agent, not even enough money to pay for an Inspection ($350 to $450) an Appraisal ($400) and minimum downpayment requirement to receive downpayment assistance from a governing agency ($1000) of their own money. 

The offer basically asked to the seller to take a ton less for the property than he was asking for it, pay all the costs associated with the loan ($4000+) and agree to complete any and all repairs at his expense in order for the home to be financed with an FHA Loan and a 5% contribution from a State Agency down payment assistance program.  In other words, take a bunch less for your property, pay for everything including the appraisal, guarantee that the home will be financable, and wait almost 60 days to close because the buyer wouldn't have any cash to close for 45 of those days. 

I had to present the offer because the law requires that I do so even though my first instinct when I saw it was to laugh and file 13 it!  I couldn't do that so I went over to my seller's place and presented this "wonderful" offer.  Believe it or not the seller met almost every term in it except for the price and the price of the appraisal.  In the end, we agreed to do almost everything but the seller wanted the buyer to at least pay 1/2 the cost of the appraisal so they were both risking some funds in the event it didn't appraise.  I think it would have but that is beside the point. 

In the end, these buyers walked away for the cost of 1/2 of an appraisal.

Now I ask you, should you try and work these things out or if you have doubts that it will ever make it to closing because you know in your heart that the buyer isn't qualified, or should you just kill it on the table?  Some agents feel you should try and make it work no matter what because buyers aren't that plentiful right now.  Others feel that you are better off killing the deal up front because you are taking the property out of the active market during prime season only to have the sale fall apart at the end because the buyer was barely qualified to begin with.

What are your thoughts?  In my case this deal died on the table and the seller was fine with it because he didn't feel the buyers would close anyway. I am not sure of my feelings on it, right now I am just angry that I wasted four days of everyone's time to have the sale fall apart over $200.

 

 

 

Posted by

Sandra J. Paulow, Associate Broker, GRI, SFR, REALTOR®

Pinetop, Arizona

(928) 242-0300

spaulow.realestate@gmail.com

 

If you are looking to Buy or Sell Property in the White Mountains of Arizona, give me a call.  I have been listing and selling in this area since 2002.  With over 16 years of experience I can assure you I know how to treat a client.  For Service you expect and deserve, call Sandra Paulow. 

SUCCESS WITH SANDRA!

 

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Rainmaker
292,454
Home Loan Search.Online
Home Loan Search Online - Newnan, GA

Wow! I hope they would have the means to make the mortgage payment, but I question it if they have a hard time coming up with $200.

As I've heard it said, "clients should be home owners, not home buyers". They should have something invested in the transaction.

Jun 05, 2009 03:46 AM #1
Rainer
26,546
Tia Stanley
RE/MAX CAPITAL - Williamsburg, VA
...focused on people & the places they love!

While I will do all possible to salvage a transaction, if the buyer let it die for less than $200, then they are either uncommited, or they really can't afford this house and any little thing might send them scurrying. I am not sure you would ever see the closing table. If people really want something that is within their means, they will find a way to make it happen. I would let this one go I think. Has your seller indicated that they want you to chase this one? Are they willing to pay all of the appraisal to keep the buyers in the game?

Jun 05, 2009 03:51 AM #2
Rainer
26,546
Tia Stanley
RE/MAX CAPITAL - Williamsburg, VA
...focused on people & the places they love!

While I will do all possible to salvage a transaction, if the buyer let it die for less than $200, then they are either uncommited, or they really can't afford this house and any little thing might send them scurrying. I am not sure you would ever see the closing table. If people really want something that is within their means, they will find a way to make it happen. I would let this one go I think. Has your seller indicated that they want you to chase this one? Are they willing to pay all of the appraisal to keep the buyers in the game?

Jun 05, 2009 03:51 AM #3
Rainer
37,484
Frances Sanderson
Bean Group / Franklin - Franklin, NH

Hi Sandra,

It seems that there are a lot of these frustrating types of deals going on lately. My feelings reflect my philosophy of life. I do what it is I'm supposed to do to represent my client to the best of my abilities and if the sale is meant to be, it will be. I allow myself one day to be angry, sad, frustrated or whatever emotion comes as a result of the situation, and then the next day I move on. How's that for an answer? :-)

Frances Sanderson, Franklin, NH  REALTOR®, Certified EcoBroker®

Jun 05, 2009 03:53 AM #4
Ambassador
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Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate

Sandra,

From your explanation I find it hard to believe that this would have ever gone to settlement. Something would have come up with the financing.

Rich

Jun 05, 2009 04:16 AM #5
Rainmaker
263,673
Sandra Paulow
Aspen Properties, Inc. - Pinetop Lakeside, AZ
REALTOR, Associate Broker, GRI, SFR

I too think that if these people couldn't afford $200 to put toward the appraisal you are all right, it was better that it died on the table.  I don't know about other places but this is the kind of transactions we are seeing every day in our market.  The average sale price is a little over 200K and the median is about 145K.  These seem to be the only kind of buyers in our marketplace right now and every other agent I talk to says that more fall apart than pull together.  Mostly because the buyers don't have any money or the financing falls apart at the last minute. 

 

Jun 05, 2009 04:28 AM #6
Rainer
19,175
Joni Gordon
Leisure American Realty/Jakus Realty Team - Fort Myers, FL

Some people feel entitled to the "American Dream" of home ownership.  In this economy too many of these people just don't have the money to acquire it.  That's why I don't even put people in my car anymore unless they have at least a "pre-qual" from a local lender.  It saves a lot of frustration.

Jun 05, 2009 06:38 AM #8
Rainer
14,159
Julie Messina
CNN Mortgage - Scottsdale, AZ
CMB

Hi Sandra,

Most state funded programs use money from the federal government intended to spur home sales activity for buyers purchasing modest housing at or below the area median income level.  I don't think the buyer you describe is their target audience.  I have a young FTHB that will close in July and she is using a FHA program with a state funded DPA and the seller will be asked to contribute towards cloing costs, BUT... borrower has a 770 fico, stellar credit, perfect rental history, and $5,000 in savings.  Actually the DPA we are using requires a $1,000 borrower contribution.  This way she will be able to keep her budding 401k intact and purchase a home instead of renting.  I don't have a problem with 100% financing methods, but I think we need to have higher lending standards for the FHA program in combination with DPAs - you are right... your deal sounded marginal at best and it's possible the buyer was not properly qualified.  Lenders should be taking a complete loan application, obtaining paper income and asset documentation, and using an automated underwriting decision in addition to qualifying the borrower against DPA rogram guidelines (which may be stricter than FHA) before they prepare an LSR.

Julie

Jun 05, 2009 10:21 AM #9
Ambassador
542,495
Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Sandra, it sounds like your seller is very reasonable and tried to work it out.  His thinking was sound - the buyers should have been able to come up with $200 to at least show committment to the deal.  Like Integrity said - they are probably not ready to become a homeowner.

Jun 11, 2009 05:01 PM #10
Rainer
22,543
Jerry Spicer
Sonoran Property Inspections LLC - Scottsdale, AZ

It's to bad you had to put forth all of the effort and come away with nothing. I guess I am surprised that the seller didn't pony up $100 and the buyer $100. Heck, the seller came that far what's another $100 or $200 if they really were that close to moving the property. I suppose you get to a point and "enough ". 

Jul 18, 2009 03:29 AM #11
Rainmaker
263,673
Sandra Paulow
Aspen Properties, Inc. - Pinetop Lakeside, AZ
REALTOR, Associate Broker, GRI, SFR

Jerry,

I think the seller thought that if the buyer couldn't come up with enough cash to pay for his own appraisal and the inspection that the sale probably wasn't going to close anyway.  He may have been right, I don't know if this buyer ever found a seller who would buy the house for them.  In hindsight I think thr seller may have some regrets about his decision to be stubborn since no other offers on the property have been forthcoming despite a price reduction. 

It seems like the longer this market goes on the more bizarre things get.  Sales falling apart for no good reason.  unreasonable buyers and sellers, arguements among the parties who are buying or selling, threats of law suits over incorrect information in the MLS, it just seems like everyone is out for themselves and they don't care who they stomp on to get it.  just a sign of the difficult times we are living in I think.  Everyone is on edge waitng and wondering what disaster is going to come next.

Jul 18, 2009 03:56 AM #12
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Rainmaker
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Sandra Paulow

REALTOR, Associate Broker, GRI, SFR
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