I previously explained how important it is to be honest with your real estate agent…
…in The Day I Fired a Client and How Your Realtor® is Like Your Lawyer Part I. The typical buyer and seller are not savvy to real estate license law, and most would not understand every detail of a contract even if they read the entire thing. That said, sometimes a buyer or seller will default on the contract accidentally or without knowing. In these situations, oftentimes the truth will come out eventually, and if your agent does not know the problem, it can be very difficult to prepare a defense to present to the other agent. A good real estate agent will grovel, offer concessions, or problem solve some other way to keep her buyer’s earnest money safe, but only if they are in the know.
Such was the case with Pete and Darby…
Pete and Darby desperately needed a new home as they could not afford the upfront costs of renting. I don’t know their entire backstory, but they (along with their 6-year old) were living in a leaky trailer in a friend’s backyard when they came to me. They were qualified for a USDA loan at a price that wasn’t great, but they had options and weren’t picky. They were also very realistic about their situation; the house they chose to make an offer on needed quite a bit of repairs to pass a USDA appraisal, so knowing the sellers would already be out paying their closing costs (USDA loans are 0% down), they made a great, full-price offer, and we were on our way.
The red flags
They barely had enough cash to put down $500 in earnest money. In reminding them that the inspection would be another $400, I respected Darby’s optimistic response of, “We’ll find a way and make it happen,” but was taken aback when Pete said, “We’ll start a GoFundMe page.” Knowing they had jobs, no housing expenses, and were fully qualified, I was hopeful this could all work out.
The inspection came and went. Sellers agreed to all repairs (as I had flushed out with their agent before we even made the offer), in addition to a $2,000 credit for some plumbing issues. I notified the lender to order the appraisal, which Pete and Darby were required to pay for upfront. I wasn’t sure how they were going to make that happen; the lender responded positively, but I got crickets from Pete and Darby. In getting mixed signals, I decided this was ultimately an issue between my buyers and their lender, so I simply told Pete and Darby, “Any delay in ordering the appraisal will delay the closing,” and let it be. I knew they were desperate enough to not want to delay closing!
Little did I know how desperate they were! A couple weeks later I checked in with the lender, and found out the appraisal still had not been ordered. Apparently Pete and Darby had communicated with the loan officer that they could not pay it until a certain day, and the lender had not communicated this with me. I firmly reminded Pete and Darby that there are “Time Is of the Essence” clauses in our contract; if the seller’s agent had asked the right questions and I didn’t have an educated and prepared answer, it could have been ruled that we had breached the contract. Pete and Darby would have lost the house, their earnest money, and the money they spent on the inspection. A few hundred dollars might not sound like a lot, but it was literally all Pete and Darby had!
Then things got worse.
I discovered Darby had lost her job. This was something I learned from the lender a couple weeks after the fact, who in an attempt to take Pete and Darby through underwriting had forwarded me an email with Darby asking, “Doesn’t my unemployment money count as income?” I was done sitting idly by at this point. I instructed Darby to go to the unemployment office and ask what employer would be desperate enough to hire her immediately. To her credit, she had a letter of employment faxed to the lender that very day and started work later that week. We had already managed to extend closing twice; meanwhile, their “friend” had kicked them out of his backyard trailer, forcing Pete, Darby, and their little boy to live in a cheap hotel.
It was even more tense from then on out.
I was micromanaging Darby, and Pete was trying to micromanage the loan officer, who was losing patience. Eventually underwriting came back stating they needed a full month’s worth of paystubs from Darby’s new job. We extended closing a 3rd time, and in those negotiations, Pete and Darby lost the $2,000 credit for the plumbing, so they would now close on a house without hot water. We ended up closing five weeks after we were originally scheduled to. Pete, Darby, and myself were all so tired of each other, this is the ONLY transaction where I have not talked with clients after the sale! But I am so proud that we made it work and Pete and Darby are now homeowners.
The moral of these stories is to always keep your REALTOR® in the loop; this is how we protect you. Like a lawyer, your real estate agent must know everything or she loses negotiation power which could cost you in a number of ways. If something happens in your personal or financial life, or if you change your mind, try not to be embarrassed about it; remember your agent is your employee, and you’re the boss. Your agent is there to act in your best interest, and in some cases, save your hiney!