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My Profit VS A Happy Customer

Mortgage and Lending with Mortgage Solutions Financial

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







Sandy Bliven
Re/Max South County - Westerly, RI
e-PRO, Westerly RI Real Estate

Nice post, what about you have a buyer and seller, short sale, selling as is, the inspection reveals termite damage, the buyer wants you to refund money.  House was being sold "as is" - do I refund the $500 to the buyer for goodwill?  Not my fault, not my knowledge, but the buyer wants me to pay... I offered to reimburse on another house when they find one, "with me of course" what would you do??

Nov 16, 2009 11:59 PM
Heidi Engel
RE/MAX Suburban - Mount Prospect, IL

Art, in this circumstance I would have done exactly as you--- Your comments "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" are the key words----I also would keep these new buyers happy---referral and doing what is right in our business is the way to say in business---Kudos to you.

Nov 17, 2009 01:03 AM
Art Marine
Mortgage Solutions Financial - Lake Oswego, OR
Loans that Fit your Life


Unfortunately, not all our customers are reasonable...sounds like you have some that are not.  I think you offer is very fair.  You actually proteced them by making sure they got a home inspection so they find out about the termite damage before the purchase rather than after.  The question you need to ask yourself is "were these buyers emotionally right to make an offer on a property "as is".  If you can't answer this question with a yes, you may want to consider the refund.

Nov 17, 2009 03:07 AM
Todd Clark - Retired
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

I think most of us at one time or another have given up our commission to make a deal work, but the key is it has to be our decision and not the buyers or sellers. If they ask "It will be a flat no!" But, if I decide to make it work for them and gift it to them, then I have no problem, it is paying it forward.

 Todd Clark - www.LivingBeaverton.com

Nov 18, 2009 07:07 AM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States

Art - I, too, have had the rare occasion I elected to close a transaction with no profit in the end. A business cannot keep its doors open if it makes that choice very often, but the end goodwill to garner repeat and referral business is a revenue source, too. I'd do - and have done - what you chose to do.

Nov 19, 2009 02:34 AM