Another Absolutely True FINANCING Horror Story
Claire had a settlement on a house in the Fairhill area toward the end of September. Our clients had decided before we met them that they were going to use a mortgage Broker they’d met (but had not done business with) previously. After contract but before applying for their loan we called our clients in and had a heart to heart talk with them about our experience with their lender. We told them the company was difficult to contact and that there were a lot of extra fees on the settlement sheet at the last minute. As a matter of fact, an agent from another Real Estate company told us that their agents no longer accepted offers that were accompanied by this Broker. Our clients, however, were unmoved. They felt their loyalty was to the original mortgage broker.
During the transaction process, we did have a problem with communication and the Buyers were asked to sign a document allowing the Broker to decide on the title company. When it was time to supply a commitment letter to the Seller’s agent, we were faxed a meaningless document – one that said little more than the pre-qualification. In addition, sure enough at settlement there was a charge for 1.5 points – 1 1/2 % of the loan amount (in this case nearly $4,000) that the Buyers had not agreed to and other “junk” fees to unknown entities.
Because the broker had run roughshod over the Buyers and had been allowed to call the shots, we had no knowledge of the financing and fees prior to settlement. Of course, our clients could have stopped the closing and refused to go forward with the purchase but they had taken some time to find a house they liked and had already given notice to their landlord. Our Buyers sat at closing and watched the money they had planned to use for paint, carpet and improvements go to the broker.
Claire and Lauren took our clients out for dinner after the closing. During the time we spent at the table, our clients asked that their story be told in my column “Absolutely True Horror Stories” in the November newsletter. They wanted to be sure other homebuyers were made aware of what can happen.
So what’s the moral here, folks? You know it – make sure you have a TEAM of professionals working with you and with each other to represent you. Find a Realtor you like and trust and listen to their recommendations!
Title Company Horror Story!
Claire recently had the Seller in a transaction that was a challenge from the beginning…
We were asked to sell a home that a well- known discount real estate company hadn’t been able to sell. We listed the home, advertised, put our marketing plan to work and managed to sell the house (for full price) after just 21 days – not bad considering it was “old news” when we listed it.
The Buyers (represented by another agent) had a title company that was supposed to be “better” because of their connection with the union at the Buyer’s workplace. The title company, however, was in upstate Pennsylvania and because they were too far away to effectively serve their customer, contracted with a Maryland Notary to handle the closing.
The Notary had very little understanding of a real estate transaction. The settlement went poorly and the lender’s representative had to step in and explain the documents the Buyers were signing.
We did settle on the property and our Sellers went on to the closing for the property they were buying… and the local title company didn’t want to accept the check from the proceeds of the day’s first settlement because the Pennsylvania title company was an “unknown”.
Confused yet?
The moral of this story? Get a LOCAL title company and a LOCAL lender and a LOCAL Realtor who will make up the team that represents you and works to make the transaction go smoothly.
Secondary moral: Don’t try to do the “For Sale By Owner” thing. It does take a team of professionals to make a real estate transaction work. Only 20% of FSBO contracts ever go to settlement and 1/3 of the ones that DO go to closing end up in litigation. You wouldn’t try to operate on your own body or represent yourself in Court, would you? Then why cut corners and try to save money when it comes to the most important investment you’ll ever make?
