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What's Your DFT Story - A Lesson in Real Estate Representation

By
Real Estate Agent

While visiting my in-laws in Greenville, South Carolina during this Christmas season, I was talking with my brother-in-law (he is a real estate attorney) about some of his past experiences. During our discussion, I was reminded of a transaction that never saw the closing table (also known as a "Deal Fell Through" or DFT). Let me share some past pain with you.

Early in my real estate career, I was representing a home buyer that was planning to obtain a 95% LTV mortgage. My client and the sellers were able to obtain a meeting of the minds with regards to this particular real estate transaction. The home passed all the inspections; the deed/title was free of defects; and the "mortgage broker/loan officer" had "qualified" the buyer for the loan.

Well....72 hours before the closing, the underwriter begins to complete their final tasks before sending the buyer's file to the closing department.

(MY PHONE RINGS)

The "mortgage broker/loan officer" is on the other end of the phone.

GOOD NEWS: My client has the 5% down payment required to receive the mortgage.

BAD NEWS: My client hasn't paid her bills in THREE MONTHS! This was her strategy to accumulate funds for her down payment.

Here are the two morals of the story.........

If you are representing a purchaser that is required to bring a down payment to the closing table, VERIFY FUNDS BEFORE PLACING THE PROPERTY UNDER CONTRACT. Unless you have a trustworthy relationship with a BANK LOAN OFFICER or MORTGAGE BROKER/BANKER, do not assume your buyer has the ability to execute the contract.

MORAL #2 -- When the buyer begins the process (at the Home Buyer Counseling Session), tell them to pay their bills AS SOON AS THEY COME IN THE MAIL! This will prevent some of the final underwriting drama!

Please share your DFT story with the AR Community.

Comments (6)

Terrylynn Fisher
Dudum Real Estate Group - BuyStageSell.com - Walnut Creek, CA
HAFA Certified, EcoBroker, CRS, CSP Realtor, Etc.

Pay their bills ON TIME.

Don't charge anything on their credit cards.

Don't talk about your loan at your bank (they try to break you out of your in place loan and get you to jump to them at the 11th hour).

Don't go look at cars or let anyone run a credit report.

Don't move money around from account to account.

Don't quit your job until you close escrow.

Don't change professions until you close escrow.

I am sure I can think of some others, but for now that should do it.

Dec 23, 2007 04:24 PM
David Patterson
Columbia, SC
ibdp3
Thanks Terrylynn for your comments. I'd love to her one of your horror stories in a post.
Dec 23, 2007 04:37 PM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate
Hi David:  Unfortunately, in the rare cases that I do have closings that fall through, it is usually at the last minute.  It is also usually on the sale of one of my listings... when the other agent does not have control over their buyer... who chose on their own to get financing thru some unknown internet mortgage company... only to have the loan program "disappear" a day or two before closing.  Not a good plan.  Take care, and have a very Merry Christmas.
Dec 23, 2007 05:00 PM
Terrylynn Fisher
Dudum Real Estate Group - BuyStageSell.com - Walnut Creek, CA
HAFA Certified, EcoBroker, CRS, CSP Realtor, Etc.

OHHH, don't get me started Karen, or they  have an out of area lender and use an out of area appraiser...the worst.  The out of area agents generally do this and it can kill a transaction faster than almost anything else as their ego gets in the way and they "feel" they should protect the buyer.  Geez.  Then know your territory and if you don't refer.

David, try not to do horror on AR, but perhaps one day...

Dec 24, 2007 03:42 AM
David Patterson
Columbia, SC
ibdp3
Thanks Terrylynn for the helpful hint. I appreciate it.
Dec 24, 2007 04:11 AM
Natalie Langford
Realty Negotiations - Winchester, VA
Winchester, VA Real Estate

I had a deal fall through due to a new car payment that didn't show up the first time credit was pulled, and client didn't share that it was missing from the mtg loan application!  Yes, at the last minute, the ratios didn't work! 

Dec 31, 2007 01:44 PM