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Buyer Paid $100 Per Day for Listing Agents Mistake in Northern Virginia

By
Mortgage and Lending with Fairway Independent Mortgage Inc. NMLS #196099

Why is the buyer paying extra per deim for the listing agent’s mistakes? Many first-time buyers in Northern Virginia arebuying homes that are foreclosures or short sales. I recently closed a FHA Loan for a buyer that purchased a foreclosed property that was a great deal! This was a loan I inherited the after the first lender could not move forward because the buyers credit score had dipped below the lender requirement of 620 or higher.

We do loans for FHA buyers under 620 score but most times it makes more since to raise credit score quickly if possible.

They were already two weeks into the 45 day contract when I took over the transaction. So I told the buyer and his Realtor they would need a two week extension for the credit update and rescore. And although nothing was guaranteed I was pretty sure if we made a couple quick tweaks to credit we could raise the score and close the transaction with very favorable terms. The bank granted the 14 day extension but at $100 per day until closing.

Fast forward and just as I planned the credit updated to above 620 and the loan was sent to underwriting. Also the appraisal report was back at higher than sales price but subject to some very minor repairs. The buyer elected to do the small repairs since the contract was “As Is” and the bank expressed in writing they would not participate in any repairs even if they were conditions of the appraisal, now conditions of the loan approval.

The buyer did the small repairs but the buyer could not turn on the utilities in the home which was listed in the appraisal to be done prior to final inspection. After calling the listing agent’s company personally I was told all utilities were turned on, so go ahead and request the inspection. The appraiser was great he actually inspected property and sent the compliance report 24 hours after the request, which would have allowed us to clear to close and buyer only pay three days of the $100 per deim requested by the seller (bank). I guess it was too good to be true because the utilities were not turned on(no gas, no electric, no water). Unbelievable! After several he said, she said conversations more like accusations the listing agent again on the next Monday stated the utilities were on in the home. So almost same routine occurs appraiser goes back within 24 hours and quickly sends back report. The electric and gas were on but still no water. Meanwhile the buyer is still being charged $100 per day until closing.

The listing agent is now insisting that the appraiser has gone mad and he just wants to go back to the property for extra inspection fees, oh by the way those “trip” fees were charged to the borrower as well.

Finally that Friday also the last day of the extension the loan closed, but not after ten extra days of per diem, three final inspection fees, and a listing agent that still could not figure out in his words “why the appraiser was trying to complicate things”.

After several attempts to speak with the bank about the representation and the situation they elected to still charge the buyer for the listing agent’s mistake.

He did give the buyer a three hundred dollar closing credit for the cost of the inspections. But ultimately the buyer had to pay for the listing agents mistake, neglect, or inexperience about something so routine like turning on the water at the main valve of the property once the utilities were turned on, wow!

Comments (30)

Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Mike;

This is so true, the price we they pay for a bargain deal!

May 05, 2011 06:48 AM
Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

David:

They took no responsibility whatsover the borrower had to take it on the chin and keep moving! Through it all they were still happy with closing,so I guess all is well that ends well but just seems a bit unfair.

May 05, 2011 06:51 AM
Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Tom:

I am not sure of the real estae law in Virginia. But after the second inspection and the water did not appear to be turned on, I called the appraisal and asked about turning on the switch to main valve since the listing agent insisted the water was on. The appraiser stated "he was not able to turn the valve on do to liability purposes.."

I would love an appraisers take on this.

The buyers agent did turn the switch to on for the third inspection or we would still be trying to close!

May 05, 2011 06:56 AM
James Loftis
RealEstate911.com - West Palm Beach, FL
RealEstate911.com

Interesting article, thanks for sharing.

May 05, 2011 08:54 AM
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

I am dealing with this right now but on the front end of the transaction.  I don't know if you are in a state that uses title or attorneys but many title companies have messaging systems on the back end. 

Listing agents try to throw buyer's agents under the bus (so to speak) with the whole utility issue or if they fail to order HOA demand or something silly like that.  Preserving their REO accounts are more precious to them than their reputation. 

What I do - I message through title.  I call the utilities (yep - each one) to get verification of the dates the utilities were off and I give everyone the communication through title.

PS not all REO listing agents are bad, just a few.

May 05, 2011 09:24 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Markita,  Wow, what a sorry example of an agent not doing their job.  Hope all gets straightened out.

May 05, 2011 09:44 AM
Jack O'Neal
HomeSmart Elite Group - Gilbert, AZ

Buyer must want the house,

May 05, 2011 01:28 PM
Lorinda Ward
Keffer Realty - Norfolk, VA
Serving, Hampton Roads Virginia. Norfolk, Chesapeake, Va Beach

I don't understand why the utilities were not on already?  When the bank sends me listings they give mea date to have the utilities turned on and I go by that date and I then discontinue the service once we go to closing.  That situation could have been avoided.  Good job, getting the job done1  Great feature post!

May 05, 2011 01:41 PM
Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

James:Thanks for stopping by!

May 05, 2011 03:18 PM
Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Renee:

 Documenting the transaction in writing makes sense. Especially calling the utility companies and verifying the dates.

May 05, 2011 03:20 PM
Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Hi Bill: The closing went well it was getting there that was scary!

May 05, 2011 03:22 PM
Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Jack they wanted the house more than the average consumer. But even with the issues it was a great deal. They bought a home with instant equity even in this market!

May 05, 2011 03:23 PM
Markita Woods NMLS#196099
Fairway Independent Mortgage Inc. - Woodbridge, VA
Queen of Mortgages - FHA, VA, Conventional, USDA

Thanks Lorinda....as you stated they give you the information on the utilities as the listing agent, so this was unacceptable.

May 05, 2011 03:24 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Markita-  Not surprising but unfortunate and very annoying for the buyer.

May 05, 2011 05:00 PM
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

Markita,

It sounds like the water was actually on and simply turned off at the main valve.

I always pressure test my vacant homes when the water is turned back on then switch it off to protect the property.

Why is it so darn difficult to turn on a valve? 

Tom

 

May 05, 2011 06:40 PM
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

Wow I would have been peeved if that would have been me!!

May 05, 2011 06:45 PM
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ

Markita,

I sure feel sorry for those buyers. Why didn't the buyer's agent call the listing BROKER after the first failed attempt to inspect?

May 06, 2011 01:49 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

I've experienced delays created by the listing agents, and they have defended the buyer's to thebanks and had those charges waived. This agent should have done the same, with the right prodding from the buyer's agent. Too bad for the buyers to have to give up an extra $1,000 because of ineptitude.

May 06, 2011 01:50 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Markita, too bad the buyers had to pay the per diem charges over something that could have been solved very quickly.

May 06, 2011 02:50 AM
Ed Vogt
Midwest Properties of Michigan - Grandville, MI
Grandville, MI Midwest Properties

I just closed on this home Friday with almost the exact same scenario.  Utilities, everything.  And my buyer was going to be charged $300 per day, but at least we closed by the closing date.

May 09, 2011 02:30 AM