What Happens AFTER Things Go Wrong

By
Mortgage and Lending with Mortgages in AZ, CA, CO, DE, FL, GA, MD, MT, NC, NJ, NV, OK, OR, PA, SC, TN, TX, UT, VA, WV NMLS #138061 MMCD #1141

What Happens After Things Go Wrong?

 

$hit happens.  There's some controversy around the creation of the phrase.  Did Professor Connie Eble bring the phrase to written form for the first time?  Was it, in fact, Forrest Gump?  While mystery surrounds the phrase, I am near certain that the original use was tied to someone with a real estate license, or a mortgage professional.  If you're in the real estate industry long enough, or you're a consumer who has bought and sold enough homes, you know somewhere, somehow, someday, something went wrong.  $hit happens, and for thousands of reasons along the way - with so many steps to the home buying process, it's impossible to avoid, even for the best, most savvy, and luckiest of professionals and consumers.

 

One of the things that separates the best in the business from everyone else is what happens after things go wrong.  A curveball mid process could sink the whole ship, causing a real estate transaction to fall apart completely, worst case leaving someone homeless and in a desperate place, or best case, inconvenienced and less than thrilled.  Or the curveball could be whacked mid air and knocked out of the park, transaction saved and everyone left happy and popping champagne at the closing table.

 

Recently, we had some $hit happen on a pretty intricate new construction purchase.  Our client was buying new construction, moving across country, and changing jobs (more accurately, retiring) mid-process.  Plenty of opportunity there for things to go sideways or for someone to forget to dot an 'i'.  And sideways things did go, but not as I expected.  As it turned out, an underwriter made a clerical error that resulted in our loan no longer being approved - the day prior to our settlement date.  Uh-oh.

 

We had an underwriter miss a clerical thing on title - taxes separated into different line items, but with nearly identical amounts (think 'one tax installment was $3251 and the other one was $3215'), the underwriter included them as one installment with a tax rate in our file at about half the actual tax rate.  Whoops!  Suddenly, and at closing, we no longer had a do-able loan due to debt to income issues.

 

How John 12 years ago (3 years into the business of doing loans) would have handled it (aka exactly how most inexperienced industry pros would handle it)

- He'd have been terrified to tell the borrower and the agents involved, instead opting to call anyone and everyone to 'fix it!' behind the scenes, even though it couldn't be fixed

- He'd have gone to the 2 places you can really do anything about debt/income ratios - the debts, and the income.  The quick "fix" would have been to pay off debt.  In fact, this is what the underwriter suggested.  There was a student loan we could pay to "Fix" things, but this was the borrower's daughters student loan and she had no interest in paying it.  If she was forced to, she'd need to make arrangements with her daughter to repay her privately, and that would have been awkward.

- He'd have let the underwriter have it.  How DARE you make a mistake - you're an UNDERWRITER!  YOU CAN'T MAKE THIS TYPE OF MISTAKE!!!  Not because John 12 years ago was a total a-hole, but because John 12 years ago thought of real estate agents and underwriters as intimidating and infallible pros instead of people doing the best they can at their job.

 

John today?

- He called the customer first and let them know what the issue was immediately, and that he was working on options to get it taken care of but wanted to note the delay so everyone had as much time as possible to change their schedules accordingly.  He called the agents involved 2nd to let them know the same.  He didn't have a solution, but he felt it important to let everyone know the timeline would be changing so they could plan accordingly, and that there would be further communication as soon as humanly possible once a plan was in place.

 

- He scoured the file for opportunities - what else could we pay off?  Could we scrounge up any more qualifying income that was overlooked?  What would it cost to buy the interest rate down?  There are always options - not always great options - but there are always options, and experience teaches that.  

 

- Knowing quirky product offerings and details, he realized we could change around the type of PMI the borrower was paying to remove it from their monthly payment, thus reducing the monthly housing debt.  They'd pay more at closing, but it would get the loan closed, AND as a bonus, their payment would go down more than $200/month as a trade off to the unanticipated expense up front.

 

- He knew that last option would work.  He communicated to the client, agents, and title company exactly what was happening, and painted a realistic picture of the timeline on how long it would take to get changes in place and get closing back on track.  Then he got to work, letting everyone know internally what had to happen, who had to do what, and suggested this be prioritized because it's OK that someone messed up, but we were accountable for minimizing the damage done, and that meant putting other things aside to focus on getting this done.

 

A few days later, the settlement happened with happy borrowers, a beautiful new home, and minimal damage done despite the very big last minute mess up.  While this may sound like a "yay John (with a big pat on my own back)" post, it's really about experience.  A decade ago, this issue may have killed the deal.  I'd have lost sleep, and my anxiety would have been contagious, having the buyers and agents a wreck.  Or best case, I'd have listened to the underwriter and had the buyer pay a debt they had no interest in paying, leaving a sour taste in their mouth.  Experience taught me other ways, taught me that there are always options, and that even in our business of numbers and percentages, there's room for creativity.  Experience has also taught me that no one is perfect.  Not agents, underwriters, assistants, processors, and certainly not me.  And that's OK, as long as we're willing to own our mistakes, communicate through them instead of hiding from them, and make a commitment to getting better every day.

 

When you work with our team, I will guarantee you mistakes will be made.  Eventually.  We also had a dozen other clients that month who all had loans move start to finish without issue.  But give us enough referrals, and work with us long enough, and you'll see a mistake.  We hope that's OK (unless, of course, you've never made one).  But we also hope you'll see the importance of how mistakes, or any curve balls along the way, get handled.  Because when everything goes right, it's easy.  But more important than what happens when everything goes right, is what happens after things go wrong.

Comments (20)

Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Once again, great blog John Meussner  Communication and keeping everyone up to date are essential to making the final settlement.   

 

Nov 03, 2021 07:40 PM
John Meussner

Thank you Margaret!!

Nov 04, 2021 02:10 PM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello John - stuff of all kinds goes wrong and it can go every which way but the right one on its way to disaster or reversal.  Maybe it did start in the world of realty/mortgage but it is evident in so many things in life.  Proper communication can help.  It may not immediately solve the issue at hand but last minute surprises(or whenever they occur) rarely make for happy endings.  

Nov 04, 2021 03:25 AM
John Meussner

Indeed, things going wrong is the type of surprise no one likes to get!

Nov 04, 2021 02:11 PM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, eXp Realty - Kalispell, MT
Helping your Montana dreams take root

Yes on both accounts. One that we can learn and change our method of operation with time and experience, and two that clear communication is a must in getting to the closing table.

Nov 04, 2021 05:34 AM
John Meussner

Thanks for the comment Kat : )

Nov 04, 2021 02:11 PM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Th movie, Forrest Gump celebrates 25 years this year and so much of hat es in the movie still resonates. As for overcoming the pile that life puts in front of us, it is the character of the individual that knows how high to step to overcome that issue

Nov 04, 2021 06:59 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi John - oh yes, the real estate transaction is like anything in project management.  Anyone can do a smooth transaction.  It takes a skill professional to navigate the obstacles.

Nov 04, 2021 09:05 AM
John Meussner

Indeed, when things get tough, that's where we earn our keep : )

Nov 04, 2021 02:12 PM
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

What a great story, John Meussner!

Clear, when the unthinkable happens, it is time to get out the TP and clean up the mess.

Nov 04, 2021 10:28 AM
John Meussner

Indeed John, thanks for the comment!

Nov 04, 2021 02:12 PM
Aura Alex
Co-Founder, CloseMyDeal, LLC - Seattle, WA
Transaction Management Services

John Meussner, here's food for thought by Charles R. Swindoll: "Life is 10% what happens to you, and 90% how you react."  Thank you for sharing the post.

Nov 04, 2021 12:18 PM
John Meussner

That sums it up completely, thanks Aura : )

Nov 04, 2021 02:12 PM
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

John- I so love this post and the fact that you showed us what the less-experienced John would have done. So, you can have all of the slick marketing and letters behind your name you want, but as in most areas in life...experience does count. 

Nov 04, 2021 04:26 PM
John Meussner

I'd argue in our industry experience is the most important factor (also important to note that 'years' in the industry doesn't necessarily equate to experience!).  Thanks Kathy : )

Nov 04, 2021 05:04 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It's all about finding the opportunity in a problem. It's cliché, but true nevertheless

Nov 04, 2021 09:26 PM
John Meussner

we grow from challenges and stress, in many areas of life, our business is certainly no exception

Nov 05, 2021 10:55 AM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I agree! I think in ever take the place of experience there is no better way to learn something more thanto do it over and over again until you perfect your craft

Nov 04, 2021 09:28 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

The previous comment was for John. You are definitely a smart person in this game for absolutely sure

 

John Meussner 

Nov 04, 2021 09:31 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi John:

It's certainly no fun when things go awry and it happens, more times than we expect. But communcating promptly, and having the solution are key. 

Jeff

Nov 05, 2021 12:51 AM
John Meussner

Exactly!   Hope you had a great birthday week sir!

Nov 05, 2021 10:56 AM
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear John,

Very creative solution. Well done. BTW, the phrase you led in with has to be pretty old. There was a variation on it used by geologists many decades ago.

Nov 05, 2021 06:27 AM
John Meussner

Interesting, I couldnt find much info on it, but the scene from Forrest Gump where he 'invents' the phrase is great!

Nov 05, 2021 10:56 AM
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Glad it worked out you. 

In a very rare occasion, We were not so fortunate this past week on one of our listings  with a buyer brought to the table by another company.

Their lender forgot to order the appraisal...ordered it 45 days after the contract was signed by the parties (despite our repeated concern to the buyer agent and lender that we were not being contacted by an appraiser)....the eventual appraiser then contacted the bank after being assigned the loan through the stupid portal for government backed loans...and let the lender know that the timeline was unrealistic for completion of the appraisal.

I have worked with this appraiser for many years and consider him one of the finest appraisers in Nebraska. 

The 21 day contract extension came and passed on Oct 29th and although the appraisal was completed on the file on the 27th...the bank on Nov 1 at 5 pm still had not approved the loan.  The buyer agent did not provide us an extension and The seller canceled the deal at 5:01pm on Nov 1.

Now the buyer and other agent are upset (understandable) and are threatening legal action which according to the contract and extension (or lack of a valid one), they will lose.

We were supposed to close on Oct 8 originally and was told on evening of Nov 2 that the bank would be ready to close on Nov 9 and buyer still wanted to close....which will not happen. 

Buyer is out appraisal and inspection costs and refuses to sign the EM release that was provided with the seller signature on it.  I am sure this will cause more headaches and pain on down the road.

I feel bad for all parties and both agents...but was required by law to do what our client wanted. I suggested to the other agent that she talk with her Broker and get guidance on what to do. Not sure what was said but she said she did talk with her Broker. Her "sue the seller" attitude has been toned down but is advising her buyer to secure an attorney...which will result in more buyer money out the window.

I council my agents to always document in writing via email and text versus phone calls...and we have multiple texts and emails that will protect us and the seller.

Not all deals are champagne and rainbows... because....sometimes $hit Happens that you cannot control no matter how hard you try.

 

Nov 05, 2021 07:23 AM
John Meussner

ouch!  Thats a tough one, and thankfully things going that awry are rare - but WOW, they just forgot to order the appraisal?!?!?  I can't say I've never had that happen, but my 'forgetting' was for a day or 2, not weeks!!   Sounds like very poor pipeline management by the lender!

Nov 05, 2021 10:58 AM
Rajbir Athwal
Tax Raj Solutions LLC - Boulder, CO
Your IRS Tax Representative

Hi John,

Thank you for sharing your creative solutions to solve the difficult situation.😏

Nov 05, 2021 12:38 PM
John Meussner

Thanks for taking the time to comment Rajbir : )

Nov 05, 2021 05:28 PM
Anna Banana Kruchten CRS, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Hi John  what big difference a few years makes with experience and knowledge or how to handle 'challening' issues. I know you're forever grateful you are where you are and can handle things calmly and smoothly.  Sh** does happens and there are always solutions, rarely has something totally fell flat for us.  Can't think of any in so long.  But then again, experience matters.

 

Great post!

 

Featured in BananaTude Group!

 

Nov 05, 2021 03:43 PM
John Meussner

Thanks Anna!  Very grateful to be where I am!! Have a great weekend!

Nov 05, 2021 05:28 PM
Adam Feinberg
Elegran - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

Most of the sales here are co-op's which are almost entirely stricter than the banks for approving buyers- so if a co-op approves a buyer, but the bank is set to not qualify them- then we know the bank made a mistake somewhere (unless something changed on the buyers side in the weeks between a co-op approving a buyer and the closing- i.e. job loss or something similiar). Co-op boards want to typically see at least 20% down payment- often more, a 28% Debt to Income limit (sometimes it could be 20% or less)  and have a post closing liquidty of 2 years worth of mortgage and maintenance payments (Maintenance includes the cost to maintain the building, pay building staff, and also covers water, heating, and property taxes). Banks aren't anywhere near that strict on their lending terms- so we typically know if the bank made a mistake somewhere. Co-op boards also require buyers to submit a lengthy purchaser board package- often many hundreds of pages long with the buyers personal and financial details laid bare- and also have to pass a board interview. A few co-op boards might even want to visit your current residence before deciding to approve a buyer. This is also why I recommend specific bankers for specific buildings on a regular basis- to avoid as many complications as possible.

Nov 06, 2021 12:55 PM
John Meussner

Adam Feinberg you note some of the many reasons I refer anyone looking for a Coop elsewhere : )   Too many intricacies and I don't work in a market focused on them, easier to defer to experts in your world!

Nov 08, 2021 09:50 AM
Scott Seaton Jr. Bourbonnais Kankakee IL Home Inspector
SLS Home Inspections-Bradley Bourbonnais Kankakee Manteno - Bourbonnais, IL
The Home Inspector With a Heart!

Best takeaway from this was that the communication never stopped and instead of acting like it wasn't your fault, just take the bull by the horns, tell everyone what's happening, and find the fix. Most folks are smart enough to realize that things happen and when they do, they can usually be fixed. If you communicate.

Nov 07, 2021 04:55 AM
John Meussner

That's what I've found over the years - - the only people who really get bent out of shape when something goes sideways (assuming communication never stops) are those who do very little business, or those newer to the industry that have yet to realize things will go wrong at some point.

Nov 08, 2021 09:51 AM
Gary J. Muccio, Associate Broker
Keller Williams of Central PA - Camp Hill, PA
Exceptional Customer Service!

Great post, John! I always comment that I'm really not a salesperson per se, but in fact a very detail-oriented project manager. Project management skills and negotiation skills (along with a lot of psychology skills!) are crucial in the real estate industry. Not for those who dislike the details. Always work toward a win-win for all, and listening more than speaking. Empathy goes a long way as well! Continued success to you!

Nov 08, 2021 05:25 AM
John Meussner

Love that mindset, Gary J. Muccio, Associate Broker - it's true, the sale aspect isn't usually the toughest part, it's what happens between the time a buyer commits to buying and the settlement day!

Nov 08, 2021 09:52 AM
Elyse Berman, PA
Best Connections Realty, Inc. - Boca Raton, FL
Boca Raton FL (561) 716-7824 CRS, ABR, GRI,ePR

Great job John Meussner .  I'm sure these buyers were very happy with you.  

Nov 09, 2021 02:38 AM
John Meussner

Thanks Elyse - there were annoyed with the last minute changes, understandably, but they were happy to know they were aware of everything that was happening and clued in.

Nov 10, 2021 10:37 AM