I guess over the years, you can say that you've seen it all, heard it all, and dealt with almost every situation in the book, or so I thought..............
Needless to say, emotions are running high these days between buyers, sellers, realtors, lenders, and every other interested party, including the media. As it relates to the lending side, now more than ever, it is critical that residential purchase agreements along with all counteroffers and addendums are properly disclosed to all parties to avoid any possible concerns in the middle of a transaction. If you have a verbal agreement of any sort, between any parties, it is your professional responsibility to CYA (cover your a**) by putting it in writing. Failure to do so will only annoy you and ultimately piss everyone else off.
To that end, I had the pleasure of receiving this purchase from a friend of mine who could've easily written the loan for a $1.5 million purchase for a high level executive that spends a fair amount of time traveling internationally. However, since the sale had been negotiated during the holiday season, with the final agreements in place around the 4th of January, you can imagine the need to be completely organized if we were to close by the anticipated close of escrow date on January 24th. He simply admitted that as a broker, he could not reasonably assure everyone that he could close on time.
On the 6th of January when I received all of the fully executed agreements and addenda, an appraisal was ordered with the expectation that it would be received by the 15th of the month.
By the 9th, calls were coming in from the listing agent, along with their escrow company, to determine if we would be closing by the 15th.
Given that everything in writing showed a closing on or before the 25th, I wondered where this earlier date came from.
Apparently, all of the interested parties had agreed that they would ATTEMPT to close as early as possible.
First of all, in the current lending environment, an ATTEMPT is just that. It is not a guarantee, implicit or otherwise that this transaction would close by then. Again, on or before a certain date, does not allow a listing agent to unilaterally determine that their own desire to close early MUST be accommodated.
As it is, real estate is such an emotional business, particularly for the buyer and seller. The professionals however, need to be empathetic, but more than anything, provide the buyers and sellers with accurate information, not opinion and conjecture. Failing to do this is completely irresponsible.
Herein, the buyer is thoroughly excited that they have found the home of their dreams. They are getting quotes for the work they want done to the home. Being threatened that their $50K deposit is at risk, as well as possibly losing the home altogether, is not only grossly unfair and unprofessional, but completely unnecessary by simply reviewing the terms of the contract. It is completely understood that the negotiation process took weeks, but the contract terms start with a fully executed contract NOT when discussions began.
The buyers agent is doing a great job communicating with all of the parties. Though she knows her buyer is protected, nevertheless she has to keep them informed as to the threats that are being communicated from the seller (or in my opinion, her agent who incorrectly advised the seller).
The listing agent is making it clear that a notice to perform will be sent to me. Last I checked, that is a conversation between realtors, not between listing agent and buyers lender. Oh, and this is an experienced agent, not a rookie. Could the $42K commission be clouding judgement here?
Regardless of the underlying reasons, a CONTRACT is a CONTRACT. As a lender, I will uphold the terms of that contract. I will uphold my duty to close on time, every time, unless I am somehow not apprised of what is expected of me. Again, guess what? My expectations come from the contract....if I see something that is somehow questionable or contradictory, I will seek clarification.
Instructing my office, my staff, and my processing team to hurry by constantly calling and emailing is not going to magically change that somewhere along the line it appears the listing agent screwed up by not agreeing to a closing date of the 15th and/or they incorrectly instructed the seller to be ready to move by the 15th.
Assuming that there were a legitimate question about the closing date, why threaten canceling the transaction over 10 days? I'm looking for a legitimate cause of wanting to risk a sure closing on a $1.5 million purchase for the possibility of someone else making an offer? I can't seem to find it even a few weeks after closing. Was there a cash offer on the table? Even so, such a conversation cannot and shouldnt be had until there is a real possibility that the current transaction may not close for some legitimate reason.
My point is that this sort of behavior only illustrates the desperation, as well as lack of professionalism in the industry. It is tantamount to the same pressures that irresponsible lenders partook in by trying to coerce appraisers to deliver an unsupported value.
What does this type of behavior reinforce to the buyer? Though we closed 2 days earlier than contract, they were a genuine bundle of nerves over the $50K deposit, but more importantly, over possibly losing the house.
What does this type of behavior say to the seller who was incorrectly advised about when they could move? Would they be able to close on their other home if this one somehow didnt close? Were they willing to take this risk as the listing agent failed to correctly inform them?
I can say this much.....I have an ecstatic buyer, and a very happy buyers agent. The inhouse escrow company provided me with 4 additional similar deals that needed to be saved from other ineffective or unscrupulous lenders (separate blog there). The buyers agent asked me to refinance her primary residence, as well as 2 of her 3 rentals (the 3rd one had a great loan).
The listing agent apologized for his behavior, pawning it off on nervous sellers. I don't believe it, but I accepted his apology, though I would never work with the inidividual in the future.
Your lender should be a trusted team mate designed to collaborate with all of the involved parties. That does not mean however, that we can be bullied. We're here to help make dreams come true.
Are you?
P.S. The property appraised close to $200K over purchase price.....Karma is a wonderful thing!
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