The Per Diem Turn Around

By
Real Estate Agent with Century 21 Moline Realty 40022101

I'm quite sure I'm not the only one who has recently encountered such cases as this, so I'm writing today to see what kind of feedback I get from others out there in the market.

In my county, in this market, REO's are what sells.  You deal with them in 90% of your transactions and showings.  There is such a flood of them, and they are dropping in price daily.

So it is to be expected that eventually, you will write an offer with a buyer and it will be accepted by the bank, and YAY! you have a pending transaction.

The days will go on and on.  Then, through no fault of yours OR theirs, the listing agent is making a call to you with those horrible words - "We're not going to be able to close on time."

WHY!?!?!?!?!  Not only are you frustrated, but so is the other agent.  Sometimes the bank accepts an unrealistic closing date in an offer.  Sometimes the paperwork doesn't get signed.  Sometimes there is no good explanation, and you're stuck telling your buyer exactly that.

What happens next?  Your buyer gets MAD.  Rightfully so, too!  I mean, you're mad, the listing agent is probably mad, and you both don't have to scramble to make sure you have somewhere for yourself and your family to stay, somewhere for your stuff, and possibly extra financial costs associated with this disorganized mess.

Your buyer comes back to you, well educated from when you went through the contracts in detail, and says "Can't I charge THEM a per diem????"

Valid question.  I mean, it wasn't in the paperwork that the sellers would pay the buyers.... but should it be?

As I write more contracts on more bank properties and I see this happen more and more often, I begin to think that perhaps as the buyer's agent, we should be writing in our OWN per diem clause.

What does the bank lose by not closing on time?  Potentially they may have to pay a couple more bucks for electric service, or a little more for real estate taxes for a couple extra days.  However the buyer could have to pay another months worth of rent, or live in a hotel for a week.  The expenses add up like crazy.

So has any buyer's reps done anything like this?  Have you thought about it?  What do you think the response from the banks would be?

Posted by

Joslyn Panka Solomon & Nicholas Solomon - Realtors

Century 21 Moline Realty

Looking for an East Central Minnesota home?  Start your search here and find the perfect property!  www.century21moline.com

Follow me on facebook!  www.facebook.com/joslynsolomon

 

 

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Rainer
91,793
Patrick Lambert
ALLY Real Estate - Waikoloa, HI
Hawaii Real Estate Expert

I think that preparing yourself and the client for the pitfalls of the deal makes the tough easier to chew on when it happens, and it will happen ... EVERY time.

Jun 04, 2008 08:38 AM #1
Rainmaker
123,974
Nick and Joslyn Solomon
Century 21 Moline Realty - Cambridge, MN
The Solomon Team - Century 21 Moline Realty, Inc.

Patrick - I agree, but it still sucks every time, too!

Jun 04, 2008 08:39 AM #2
Rainmaker
623,862
Lindsey Hasford
Edina Realty - Elk River, MN
Bringing you home...

Joslyn - I often wonder why the banks get to make all the rules... and make them work out best for themselves. It's like dealing with a cranky two-year old that is allowed always to get it's own way. I have wondered about writing a per diem for my buyers before but figured it would only madden the person at the other end. If you try it will you let us know!?!?!?!

Jun 04, 2008 09:28 AM #3
Rainer
105,568
Craig Alexander
Coldwell Banker Premier Properties - Front Royal, VA
Associate Broker in Virginia

I'm one of those REO listing agents...for the past 2 years it is pretty much all I have done.  This is a typical reaction to those situations.  I Always try and educate the buyer's agent (and hopefully the buyer as well) that REO deals are never easy.  You just have to remember that the bank is like any other bureaucracy.  It typically takes a lot of time and many different people to put the transaction and paperwork together.  I also remind everyone not to expect to move in immediately...sometimes it takes time to get a seller approved HUD-1.  Everyone (buyers, buyer's agents, listing agents) need to be counselled from the very beginning that these deals can sometimes be unpredicatable, it can be a great transaction leaving the buyer with a very good bargain.

Jun 04, 2008 09:42 AM #4
Rainmaker
123,974
Nick and Joslyn Solomon
Century 21 Moline Realty - Cambridge, MN
The Solomon Team - Century 21 Moline Realty, Inc.

Lindsey - I keep thinking the exact same thing.  The last thing you want is a mad AND cranky two year old that always gets its own way.  I'm afraid we'll get the "I'll wait for an offer that DOESN'T have a per diem."

Craig - I agree, but I have listed some where it has taken months for someone to open up an email I sent them with a few pages to sign, sign and send back.... all pushing the closing back one, two, even three months.  Not ALL are like that, but some of them.... WOW.

Jun 04, 2008 04:08 PM #5
Rainmaker
104,214
Robert Slick
Beach and River Homes - Georgetown, SC
NRBA, RDCPro, Trident/CCAR MLS

Just wondering...is your picture upside down on your business card?

Good post. I'd say if the client is willing to lose the deal write a per diem clause, make it reasonable. If banks can charge multiple overdraft fees on your account in one day why not try to turn the tables a bit?

Jul 12, 2008 07:50 AM #6
Rainmaker
539,291
AJ Heidmann ~ CRS
McEnearney Associates, Inc. - Alexandria, VA
YOUR Alexandria & Arlington, VA Real Estate Expert

You could write in the Per Diem, but it might serve the client's better to offer a realistic settlement date in the offer and prepare the buyer for potential delays, as REO transactions are rife with them.

Jul 12, 2008 11:20 AM #7
Rainer
83,602
Matthew Zgonc
Aksland Real Estate - Modesto, CA
Realtor, CFS, CVS

I think educating the client about the pitfalls that could occur, is the best thing to do. Although making sure that your client doesn't get charged the per diem is the most important thing.

Jul 12, 2008 12:59 PM #8
Rainmaker
123,974
Nick and Joslyn Solomon
Century 21 Moline Realty - Cambridge, MN
The Solomon Team - Century 21 Moline Realty, Inc.

Robert - Nope, no upside down pictures on my business card.  Just here, and it hasn't been forever.  And I agree, I think we should be able to stand up for ourselves.  Dealing with another case of this right now. 

AJ and Jodee - I agree with that, too, but in the current case (not so much the one I wrote this blog about) the buyers wrote for just over a month, because the bank requested a month.  However, the closing company did not do title work until a couple days before, and of COURSE there was an issue, so now we're just patiently waiting.  In this case, though, it was not the seller's fault.

Matthew - I agree!  I always make sure our ducks are in a row when we write the offer!

Jul 21, 2008 03:20 PM #9
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Rainmaker
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Nick and Joslyn Solomon

The Solomon Team - Century 21 Moline Realty, Inc.
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