Phantom Buyers

Yep, I practice "CITO", Come In To Office!  Bring drivers license, financials and we will talk about your wants and needs while our loan officer pre-approves you.  Then we sign a buyer-broker agreement and THEN we go look at homes.

Without a lie....   A long time ago in a galaxy far far away....

Commercial Listing for Apartment building,  Suspect called then asked if they could buy the entire holding company.   Scheduled an appointment Face to Face.   POOF Then there was a Buyers agent now in the room,

Fine, we are now at a meeting table and negotiate a $5.3 Million dollar contract without a deposit to hold all these properties (they bought the holding company) for a period of 21 business days upon which a formal Contract would be submitted with a $250 thousand dollar commitment fee.

Can you guess? OK so the 21 days pass, the seller is excited and extends extends extends extends the pending contract without a deposit cheque AND we finally receive a contract offer to purchase. WAIT!   the offer isn't signed.  We all assumed that Someone from all the lawyers actually was holding a signed contract. 

I dropped out after 30 days of monkey business, My vendor held off looking at different offers as this one was going to come through.

To the Purchasing Agent I asked a quiet question; Has your buyer put money down on anything as of yet?   I finally received a humble no.   This guy was out show tickets, drinks, dinners and nights around the town.  Back slapping and Laughing at jokes does not pay the expenses.

If they trick Agents  Imagine how they twist a for sale by Owner.

Thank you for letting me tell my story!

David Pylyp

Living in Toronto

Gary:

The money quote: Don't waste your time on people that have no intention of buying.

Amen.

Asking for that prequal letter of proof of funds saves a lot of time.

That's the first question I ask "Are you pre-qualified?"  If not, here's a list of lenders...have them send me an LSR and I'll be happy to show you homes in your budget.  "Cash?"  Please have your banker or broker send me a letter or other proof of funds and I'll be happy to show you homes in your budget.  I'm not driving you around on a scenic tour of the state if you can't buy!

Phantom buyers are popping up in other places too with this crazy economy.  Surely they have always been present at the front end (asking for that pre-qual or proof of funds is important).  Now they are showing up at the closing table.  Fear of job loss or other economic fears are causing buyers to walk prior to signing that last closing paper.  Just read an article that buyers are thinking renting is the way to go (NOT)

Years ago I had a broker friend who was such a genuinely nice guy that people walked all over him. I can't count how many times he gave up his whole commission to help out a buyer or seller. It was crazy.

One time he told me about a  couple who came to town every summer and looked at unimproved land in the mountains. About the third summer he turned to them and said "Do you have any other hobbies?" They looked startled and asked what he meant. And finally they admitted to him that no - looking at property and homes was their only hobby. When they came to our town, they just loved driving around in the mountains with him.

There is another kind of "false" buyer and I still haven't figured this out. We had a couple of "investors" come to town from the Seattle area. They were interested in every run-down, cheap, owner-carry house in town and they made offers with every agency in town. In all but one instance, once the offer was accepted, they disappeared for a while.

The one transaction that closed turned out to be a nightmare for the attorney's office. They wrote a personal check for the down payment. So the closer held the paperwork for 2 weeks, waiting for the check to clear the bank. Finally, she issued payment to the seller - and the next day the check bounced. (Guess she should have called the bank first.)

We know they were running some kind of scam. But what?

One (shady) agent in town tried to find out. She called and offered to buy them lunch if they'd tell her the scam and let her in on it. They declined.

Just experienced a new one this past month.  I have a listing in a beautiful luxury condominium listed in one of the premier buidlings in the area.  10 foot high ceilings, double crown molding - very elegant.  Many people have come to the open house because they just want to see the interior of the building. A charming older gentleman has come in for the past four open houses - each time with a different woman.  We chat and they always have very nice things to say and I finally realized that this is his Sunday afternoon date!  Go to brunch and then look at a few open houses. 

Gary:  We've all had "lookers"!  Isn't it amazing how shocked she was when you asked her to show she had the ability to actually buy the home.  Wow, what a concept, proof of funds.  Carrie

The moment a buyer exhibits any sign of refusing to prove their financial capability, red flags should wave and alarm bells should go off in an agent's head. 

When it comes to money, everybody's funny. Unqualified buyers aren't funny. They cause a lot of people to waste  alot of time. Smart agents ask the right questions early on.

Gary ~ I just wrote a post about the guy that called me and his sister had all the money.  I could tell he had just paid for and watched one of those "tapes"

If a Buyer doesn't want to provide proof of funds he's not really a Buyer.  Better remember this and not waste my time.  Margaret C.

Dear Gary,

It is easier to smell these folks after running into a few, but once in a while, one of them still gets through the filters. Always a "wow, never heard that one before" moment.

I deal only with buyers. I do not deal with those who cannot qualify for a loan. If they say "cash" I get proof of funds.

No approval. No cash. No buyer.

Gary - the other thing to think about in qualifying a buyer - is one that should always be in the back of our minds ... that has to do with safety ... It literally scares me when I see folks running out the door to meet a buyer from a call they just received ...no qualification AND a lot of risk!

Gary:  Really great questions for Phantoms...send them to someone else to entertain.