FINALLY CLOSED!! - Posted by Kristy-AZ

Real Estate Investing Vacation Rentals
1

Posted by Vic on June 28, 2003 at 19:46:01:

Kristy,

I don’t get it. You come on this board loooking for help, then when someone tells it to you like it is, you get all defensive. Why ask in the first place, if you don’t want to hear the answer?

Let me address your response one more time.

You say you monitored it. Did you call the title company & say - Mr. tilte co. this loan is scheduled to close on such & such a date - do you have in your possession all of the documents from the lender to close on that day? Yes you do - OK good! No you don’t - uh oh, red flag! I doubt that the title company would not have lied to you about this. If you monitored this just with the lender only, then of course the lender would say whatever not to lose the loan.

Your conditional loan approval form means nothing. Suppose your buyer thought they could get a loan without having to sell their house? Suppose the buyers thought they were going to keep the house & rent it out, but later changed their minds? The conditonal loan form is only if the buyer wants his offer contingent upon selling his house first. Period! IF the deal doesn’t close on time, then you’ll could have walked away. Sure it would have been nice if they gave you that form, but it certainly isn’t required. It’s only required IF they want their purch. agmt. contingent on selling their house. If they lied to you about this, then you shouldn’t have given them an extension in the first place.

You say you’ve been in the business 10 years huh? And you haven’t seen ayone close a month late, huh? Well maybe everyone in your city does exactly what they say when they say. But if you think these things don’t happen all the time, then you are very naive. Sales are constantly pushed back a week or two or even a month sometimes for a whole variety of reasons, esepcially with some lenders taking up to 2 weeks right now to underwrite a file. Granted, most should close on time, but you will always have a few be pushed back as much as a month. You see, you just had one. Guess what, you’re going to have others too. Get over it!!! It happens!!

You’re right Kristy - most contracts state “time is of the essence”. And when they don’t perform on time, you go find another buyer if that’s what your seller wants to do.

I get the feeling you’re trying to be this “perfect” real estate agent. Let me tell you, that’s almost impossible to do. There are just too many things outside of your direct control. IF you want to beat your head against the wall evertime something outside of your control goes wrong, then be my guest. But coming on here & compalining about it isn’t going to solve anthing, especially when you don’t want to hear the answer.

Vic

2

FINALLY CLOSED!! - Posted by Kristy-AZ

Posted by Kristy-AZ on June 27, 2003 at 22:59:23:

This is geered mostly to the agents here. After almost one month past the closing date, one of my listings finally closed but not without it’s problems. I wanted to get some BROKERS opinions on this transaction, as my Broker intructed me to continue and try and close the deal instead of trying to find another buyer.

I was the Listing Agent, we got a VERY clean contract, no contingencies and a convetional loan. The contract was received and accepted on May 9th, and the COE was supposed to be on June 3rd. My sellers had an FHA loan and knew they were going to have to pay the additional months interest, but they were OK with that, since they weren’t going to have to make the payment out of their pocket.

Seller agrees to everything on the inspection and does repairs. I kept in contact with the Lender who said everything was going fine, just waiting on appraisal. Title has pre-lim done and waiting for loan docs. Seller has found a place to live/rent. Paying $1000 per month. His house pmt was only $650.

Three days prior to COE I call Title… no loan docs. I called lender, they were waiting for a POA from the (buyer) husband, since he was going to be out of town for the signing. The Day the house was supposed to close, I get a call from the buyers agent stating that the closing has been delayed because the BUYERS house has not closed yet. WHAT!!! What buyers house?? There were NO contingencies in the contract. She says that the buyers did have a house to sell and everything looked like it was going to close on time, so she didn’t think it needed to be mentioned. Plus, it was her associate that wrote the original contract and he wasn’t aware that the buyers were selling a house. She took over the contract when she came back from vacation, but she still failed to tell me about the buyers having a house to sell! Now we are on the closing date and can’t close.

I talked with the seller, he was OK with doing an extension till June 16th. I suggested that we add that the buyers will have to pay an aditional $50.00 per day that the house doesn’t close. Seller did not want to make waves at that time and just wanted to extend the closing to the 16th. He just wanted to make sure it closed, plus he was out of the house now and in a rental house.

June 16th comes along and guess what, we still can’t close. The buyers on the other end still need to submit paycheck stubs. There was more to it, but just go with that for now.

Now my seller is starting to get upset. We do not do another extention, so by all rights the contract is void. Another week goes by and everybody is up in arms. I suggested to the seller we put the house back on the market and see if we can get another buyer. I then called by Broker and explained the situation and his response was to try and get it closed. Well, we don’t know IF it will close. I put the house back on the market subject to cancellations of this deal. We got an offer on the 2nd day. Now we go back to the buyers agent and tell them we have a solid back up and will move forward with the new contract if their buyers don’t perform. And the buyers must pay the sellers $50.00 per day for every day that the contract has not closes since JUNE 4th! No extensions were made, so the buyers would loose their earnest money deposit upon cancellation of the Seller.

Guess what, with in 24 hours, the other house funds, and records, then we received funds today on our side. Plus the seller is still thinking about going after the other agent for non disclosure. He was the only one effected in this whole transaction, with moving, rental fees, time off work etc. Had we known there was a contigency we would have addressed the issue differently and the seller would not have had to move a month early. Other agent is crying about the additional fees the seller got, saying it wasn’t her buyers fault that the transaction didn’t close on time, however, they also failed to disclose they had a house to sell.

By the way, the back up contract that came in was aware of the situation, and the contract was contingent on the buyers and sellers having a signed cancellation from the 1st contract in escrow. And that they were in fact in a back up position.

What would you have done here?? I helped the seller recoup some of their money they put out for rental fees and moving fees. They had to pay another house payment out of pocket to keep from being late on the mortage payment, because this didn’t close on time. They had to find a place, pack and move 5 children in a short amount of time. They did everything they were supposed to do according to contract. Everyone else dropped the ball!

Kristy-AZ

3

Re: FINALLY CLOSED!! - Posted by Mike G

Posted by Mike G on July 01, 2003 at 16:03:06:

Not a broker, but have a comment. Why not include a clause in all your sales contracts that states that the property is subject to prior sale until such time as the buyer named in the contract shows a written, unconditional, verifiable loan commitment (if applicable) along w/ proof of funds needed to close and all contingencies have been met. Then don’t stop showing the property and entering into contracts w/ people until someone closes.

4

Re: FINALLY CLOSED!! - Posted by Anne_ND

Posted by Anne_ND on June 28, 2003 at 11:10:55:

Kristy,

I’m going to weigh in here, although I’m neither a broker nor an agent. I’m just an investor who’s dealt with a lot of REALTORs, most recently I sold a house thru a REALTOR last week.

First of all, I think you did a terrific job for your seller. It is entirely appropriate for them to be compensated for their troubles- but it seems to me that this is something that should be addressed in the contract at the time of signing. Build in those safeguards and be prepared to act on them. I find it amazing that in 10 years you’ve never seen problems like this before.

In four years of buying, and now recently selling, I’m amazed at how many people do not (apparently) have any intention of following through on contracts that they have signed. And I am further amazed by how many REALTORs seem to have no problem with that. They don’t perform for whatever reason and then they don’t want to deal with the consequences. I don’t get mad anymore, I just point to the appropriate clause in the contract and say “sure, no problem, you just have to give me another $500 (or whatever) to keep the contract alive”.

I really believe in the saying “you don’t get what you deserve, you get what you negotiate”. The fact that your seller had to “find a place, pack and move 5 children in a short amount of time” is irrelevant. If they didn’t want to move 5 children then they shouldn’t have had 5 children. If they didn’t want to move them on short notice, well, then build that into the contract. Frankly, it’s a blazing market out there right now, and houses (at least where I live) are going FAST- like in 2 days. No one should be surprised that they put their house on the market and oops it sells.

Okay I’m done ranting now, I just have a thing about personal responsibility.

Again, you did a great job for your sellers, and I’d use you as my REALTOR in a heartbeat. Any interest in a move up north?

Anne

5

Re: FINALLY CLOSED!! - Posted by Vic

Posted by Vic on June 28, 2003 at 02:32:44:

Kristy,

First of all, the buyer’s do not have to disclose that they had a house to sell. They could have, but only if they wanted their purchase agmt. with your seller conditioned upon it. Perhaps they could have gotten a loan whether their house closed or not. You’ll have nothing here to complain about here as far as disclosure goes.

Plain & simple their purchase agreement said that they were going to buy the house by a certain date, with no contingencies, other than the usual. That’s what should have happened. When it didn’t close on time, because of their sloppiness, your seller could have walked away & kept the deposit.

When they didn’t buy it, it was then up to your sellers to decide whether or not to give them an extension. Your seller gave them one extension & then when that didn’t close on time, your seller could have just said, forget it, I’m not giving them another extension. Let’s just put the house back on the market. Once the extension expired you’ll no longer had a contract. The seller was free to do whatever he wanted. Your seller has nothing to go after as far as disclosure is concerned.

How long have you been an agent, btw? These things can happen all the time, if you don’t monitor them. If your seller was mad that they didn’t make the offer contingent upon your buyer selling his house, he should have kept their deposit, & accepted the back up offer. That was the time to do something, & that was the thing to do. Too late now.

Did you not follow up with the lender & title company a few days before each scheduled sale to make sure everything was on track? It doesn’t sound like it.

Vic

6

Re: FINALLY CLOSED!! - Posted by Tray Giddens, Houston

Posted by Tray Giddens, Houston on June 30, 2003 at 14:01:21:

looks like a pretty run of the mill deal to me…
the only thing i would have done differently , which is what i do in my business here in houston is to get it back active on the mls the day after it expires.
(this way the other agent knows you aren’t playing around)also, negotiate that the contract is not subject to financing, if at all possible… that way the e.m. is liquidated damages if the buyer doesn’t get the loan. if the buyers still want the house, do an amendment to the contract with non-refundable earnest money for a 2 week period. most importantly , you have the worthless prequal letter, call the loan officer the day you get the offer… heck, it’s a 2 minute conversation and you will know if these people are really approved or if the prequal is b.s., like 90% of them.

TRay Giddens, Realtor
Houston, Texas
traygiddens @ www.hudsandvas.com

7

Re: FINALLY CLOSED!! - Posted by Kristy-AZ

Posted by Kristy-AZ on June 28, 2003 at 13:27:14:

Hi Anne,

Thanks for the kind words.
As far as the sellers being upset, it’s wasn’t because they had to move so fast and all, it was because they did everything they were supposed to do, and then had to write a check for the mortage pmt. If everything had closed on time, they wouldn’t have had to write that additional check, and the move would have been no big deal. All the other parties were sitting comfortably in their own homes and not having to make double payments. Rent and mortage.

As far as setting up for problems, I always call the mortgage company to see where buyers are in the loan process. In this one the lender assured me they were thru the underwriting and just needed a house and an appraisal. Everything else was complete.

I do check into things and write any clauses that I feel should be included to protect my clients. I almost always state that the Earnest Money will be non-refundable for any reason after the inspection period. That way if for some reason the lender has told me everything is fine, “they are golden buyers” then at the 11th hour the loan comes apart, at least my sellers will get some compensation.

I took some knocks my very first year in RE. I make sure my clients are protected one way or another. I’ve been pregnant twice as a RE agent, and on one closing, I had my baby girl 5 days before the COE. We still hadn’t done our final walk thru. I met my client at the house 2 days after having my daughter. I don’t wait till the day of closing just in case there are any problems. My client was in shock that I didn’t have another agent do the final walk thru with her. She was also happy that “I” was there. There was a problem on this closing too. My client didn’t want to pay extra money to have the inspector come out and reinspect the issues we had. There weren’t many, but one had to do with some minor electrical issues. The sellers were supposed to have fixed. I couldn’t test it at the time. (I can now) so we closed on the deal. As everything seemed to have been fixed. Afer closing we found the electrical issue was not addressed and asked the sellers if they were gong to take care of it. Obvious response was, “No, we are moved out, it’s your problem now”. Auh Geez! So I had my electricians go out there and fix the problems, and I paid for the repairs. Even though the buyer didn’t want to pay an inspector additional money to reinspect it. I felt it was only fair I take care of it. Most agents I know would have said “oh well, you didn’t have the “inspector” come back out so it’s your problem.” I can’t do that to my clients. She was a single mom, had been through a terrible divorce, I had helped her sell her other house, so she could get into a new house and start over.

Do I get emotionally involved with my clients?? You Bet!! I’m not just their agent, I’m also their friend. I still have contact with almost every client I have dealt with. I get invited to Graduations, B-Day Parties, Anniversarys, Family gatherings and more.

When I got into RE it was’nt going to be part time. I hate the way society has tunred out. No personal service, everyone is a number, and in RE, most agents are only concerned about thier commissions and not their clients. Of course I want to get my commission, but I also want my clients to be happy with me and the service they received. I know eventually I will be paid.

Sorry to ramble on. Maybe if we ever get your direction, we’ll look you up. Thanks again for your support.

Kristy-AZ

8

Re: FINALLY CLOSED!! - Posted by Kristy-AZ

Posted by Kristy-AZ on June 28, 2003 at 10:39:15:

Vic,

Obviously you didn’t read the whole thing. I DID monitor this everyday! I was assured everything was going fine. Every other day I was told they were just waiting for funding.

As far as the disclosure…our contracts require that a Conditional Loan Approval Form be submitted with the contract, on that form it specifically asks if the buyer is relying on the sale of their current home to be able to buy a new one. They should have said “YES”, because they could not close on our house without the proceeds from their old house! So yes, it was a disclosure issue here. Even their agent admitted that she didn’t bother to tell us, because she figured it would all go smoothly and nobody would have to know about the buyers needing to sell and close on their house first.

And in the end, my seller received an additional $1150.00, because we required that it be paid or the seller would walk and take the back up!

As far as your statement that “this happens all the time”. No it doesn’t! Maybe on occassion it takes an additional day or two, but not 3 to 4 weekes! And I have been in RE for 10 years. This is the first time I have ever had a closing go so far past the closing date! Maybe you would have just floated with it, but I was able to get my seller $1150. more compensation from the buyers, because they didn’t perform as they were required to. Buyers are mad, but who cares, they didn’t perform or disclose, and my seller is happy that he has received the additional funds! After all, he did everything right.

Frustrating?? Yes…I worked for the seller and made it right with him. I know many agents would have just tried to “wait it out” without any compensation to their clients. I just don’t see it that way. There are timelines for a reason. That’s why all the contracts state the “time is of the essence”.

Kristy-AZ

9

Re: FINALLY CLOSED!! - Posted by Anne_ND

Posted by Anne_ND on June 28, 2003 at 23:06:52:

Kristy,

I’m with you about personal service. I have considered many times becoming a REALTOR here because the level of service that others provide is so lacking (or inconsistent). There are a few good people whom I’ve used for various deals, but they don’t seem to understand what I’m looking for, although I’ve tried to be explicit. Oh well.

I lived in AZ before moving up here for my (former) J.O.B. What a great place to live. I’ll take the dry heat any time. I’m distressed about the fire on Mt. Lemmon- SummerHaven was a great hiking spot, and they had the best pie store in the whole state. I hope it’s survived. I was in Chandler before I moved up here, but also lived in Tucson and Tempe.

take care,

Anne