It has taken me this long to become emotionally detached from a deal that I was involved in last November to the point where I can now write about it.
I met this client when I was on a special duty assignment for the Army Reserve. It was a month long assignment and I made fast friends with this client who was assigned to the office I worked in.
After almost three years of working with her and advising her on ways to improve her credit score, she and her husband were ready to buy a house.
I began showing my client properties that met her criteria. The first indication that things were not going the way they should was that she never liked any of the properties I sent her from the MLS. She insisted on sending me listings from another company's website no matter how many times I explained to her that those listings were coming from the same database I used. I think she was bound and determined to make the "find" of her house on her own.
Eventually, she chose a property that was not listed in the MLS at all. It was a FSBO, for sale by owner, or an unrepresented Seller. It was about 30 years older than what she told me she preferred, and had about two acres more of land than she said she wanted. It also had a broken hot tub and a swimming pool. However, the price was right, and it seemed like a pretty good deal to her.
The first red flag was the innumerable repairs the Seller was making and was promising to make prior to settlement. She was busying herself with a lot of repairs, some minor, and some pretty big undertakings.
Unbeknownst to me, my Buyers had already been to see the property once before calling me to meet them out there. Luckily, the Seller was OK with that and still agreed to pay me a fee for bringing in the Buyer. Against my better judgement, I agreed to represent my Buyers on this deal. I had been working with them for so long, I agreed to do it for a reduced fee. Unfortunately, however, like most FSBO Sellers, this one mistakenly thought that I was also going to perform the duties of a listing agent. This misunderstanding made the Seller mistrusting of me. She mistakenly believed that because she was paying a fee, that it meant I was working for her.
The home inspection and well and septic were completed. There was a very large list of items on the home inspection report, and the Seller agreed to almost all of them. This also struck me as odd, since it was quite an expense to her. The inspector also made note of an underground oil tank that existed that the Seller had not mentioned. She later said she mentioned it to the Buyers, but she nor they never mentioned it to me. Luckily, there were no issues with it.
The real problems began when the property was being appraised. First, the lender told my client that the appraisal would have to be paid for separately (outside of closing) and he gave her the information to mail the check to the appraisal office. However, instead of mailing the check, my Buyer decided to deliver it in person. Unfortunately, the clerk at the appraisal company refused to take her check. Even though the appraisal had already been ordered, they told her that they could not accept the money prior to the appraisal being completed. I believe there was some friction during that encounter that set off the chain of events that killed this deal.
The appraiser informed me at 4pm on a Wednesday that the appraisal would take place at 9am the next day. I had a conflict– an appointment with an out of town Buyer referred to me by our relocation company. I was obligated under no uncertain terms to meet with them when arranged. I could not cancel the appointment. But I also had no time to react to get another agent to fill in for me on the appraisal. When I called the Seller that morning, she told me that the appraiser said that he didn't need me there. This was unusual, but I had no choice.
Unfortunately, the appraiser noted in his report that I "never showed up to the property" while he was there. He also noted that the "addition" built on the property was separately metered and also had a separate septic tank, making it a "second house". That being the case, there were no suitable comparables within 3 miles to use. He valued the house at the asking price but he said that he could not assign a value, if any, to the "second house". This left the appraisal incomplete. We (I and the lender) asked for an exception to policy due to the uniqueness of the property, and suggested the use of comparables outside the immediate area, but with a caveat that they were only being used to show that a VA loan could be obtained for this type of property.
The original lender denied the loan based on the incomplete appraisal. My Buyers were pretty upset. They did not understand what happened no matter how many times I explained it to them. I took the appraisal and shopped it to six different lenders before I finally found one that would do the loan. But when that loan officer did a hard pull of their credit, which was required, my client's credit score dipped 5 pts below what the acceptable minimum was. My clients could not do a conventional loan because they could not meet the downpayment requirements. I took it to a seventh (7th) and final lender, who could do the loan with the lower credit score, but they too would not loan the money because of the appraisal. They asked for an addendum that would say that the second kitchen would be removed, and that the "addition' could be used as additional living space. The appraiser refused to do an addendum. He did not feel he needed to help us at all. Then SURPRISE! he had to "remind" us that we were asking him to do extra work when the client had never paid for the appraisal. Both the lender and I now had egg on our face, and once again we had ask my client to pay for the appraisal. This deal was dead, and my clients were furious.
Almost all the lenders I talked to told me that it would be a "miracle" for the Seller to get a Buyer that was using an FHA or VA loan due to the current appraisal. But I soon learned that the next Buyer obtained FHA financing to purchase the property. I learned this later from my client who saw fit to point this out to me long after she was no longer my client. I also learned that the FHA appraiser who came next knew nothing of the separate electric and septic systems, the Seller did not disclose this information. The new appraiser used comps that matched his description of the property as a single house. The Buyer's agent was a little surprised that the new listing agent did not disclose this.
During the purchase process, I also learned that there were no permits on record for the additional property that was built as an addition. We learned that the basement under the additional property was horribly wet. We learned that the cement around the pool was deteriorating and would have to be replaced before it sunk into the ground. Despite all this, my Buyer was fixated on that house. It really was an unfortunate series of events.
My client never paid for the oil tank inspection and referred the inspector to me for payment. I didn't pay it of course. It was her bill. She also requested her money back for the home/pool/roof inspections.
My client still expected me to show her properties while she was still under contract with the FSBO. One night I was terribly sick. And she became angry with me when I said I just couldn't do it. The relationship had become toxic. I referred them to another agent in my office, with full disclosure of the problems. My clients refused to meet with her and insisted that I continue to help them. I did not. I released them from their Buyer agreement. I was losing my health and well-being over this deal.
What did I learn from this? I learned that sometimes FSBO Sellers are hiding something. Sometimes they are hiding a lot . They will want to pay you less than you are worth and expect you to do their job too. You have to really educate them and if they still don't get it, you have to walk away. I learned to vet my Buyers and REALLY get to what they want. Sometimes when they don't know what they want, you realize that there is no way they are going to be satisfied, and you have to walk away. I learned that even if 7 different lenders tell you something can't be done, you will be proven wrong. I also learned that you simply cannot sacrifice your health for a transaction, no matter what.
The original lender I was working with left the business not long after this. He had been contemplating a move long before, but this was a small contributing factor. I contemplated leaving the business myself. But I decided to stick with it and if I ever decided to leave, it would be based on my own feelings of the business rather than how one client made me feel at one moment in time.
Once I released them from our Buyer Agreement, my health returned almost instantly. It was uncanny. I still had to deal with the aftermath: they threatened to sue me and to file a complaint to the real estate board. None of which ever came to fruition. But in the end, I feel I came away smarter, more cautious and with renewed energy.