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)Subscribe to CommentsComment