This post was inspired by Andrew Lenza’s post Playing with House Money Inside the Titanic’s Casino! Receiving an Offer. If you’ve never read Andrew, here on Activerain, you should, he is a fabulous writer.
I was going to comment on Andrew’s post, but realized what I had to comment was too long, so decided to share a situation I had several years ago with some friends, who were past clients.
Let’s say Dick and Jane, moved to Ann Arbor many years ago and I introduced them to a builder who built their new home. After a few years, Dick lost his job and although he was able to get a new one it didn’t pay as much. So they decided to sell their home and rent. The market was good at the time. They were going to rent, get back on their feet, and pay off credit cards.
I asked them if they were behind in any payments. Their response was no; however when they refinanced, County Wide was suppose to make a payment, did not and now they had one payment that was behind. I told them DO NOT MISS ANYMORE PAYMENTS!
We listed their house and over the listing period, of a month had 3 offers. The last one was going to work, all contingencies were met, so Dick took off the week before they were suppose to move into their rental and got all of their furniture and belongings out of their house into the rental.
The night before closing, I went over to get my sign and lockbox. (Never again... do I do that until after the close) The new buyer was there with one of those rolling carpet measuring sticks. So I went in and said hello to them and their Buyer Agent. I asked if they were replacing the carpet, because the house was only a couple of years old and neutral.
“No, we are just measuring the square footage”. “Our lenders appraiser, came up with a different amount,” they said.
When I left the house, I called Dick and Jane and asked them to please dig up the appraisal amongst their many boxes and bring it to closing as there was a discrepancy in the square footage that Mr. Buyer was concerned about.
When I listed the property, the tax records said 3000 S. F. However, when I went to the house to list the property, Jane told me that was wrong that they had an appraisal saying 3500 Square feet. (my mistake…I should have asked to see it) However, I did not ask to see it and relied on her information. On my listing contract you can see where I crossed it out and added the additional square feet, per appraisal.
No real damage done, or so I thought as the sellers did have an appraisal that said 3500 S.F. She brought it to my office the next morning, which I faxed over the Buyer Agent for his client to review.
The loan was funded, the house appraised for the selling price...
As we were walking out the door to attend the closing, I received a call from the Buyer Agent saying Mr. Buyer was not going to close unless we came down on the house.... $20,000.00 to reflect the difference in square footage.
“What? I faxed you the appraisal?”
“Yes, but he doesn’t agree”.
So, I called an appraiser I knew and said I would pay him, but could he “please go over quickly to measure this home”? He did and it was also a different square footage, than the tax records and different than the sellers refinance appraisal. Now we have four different measurements:
The builder, the tax records, the lenders appraiser and the one I hired to check the measurements.
The buyer still refuses to close unless we come down $20,000.
The funds are sent back to the mortgage company.
To be continued...
(It gets better)