Inman

The toughest real estate transaction

Editor’s note: The following is a collection of real estate professionals’ responses to a real estate-related question.

QUESTION: What lessons did you learn from your toughest real estate transaction?

Jay Thompson
Designated Broker/Co-owner
Thompson’s Realty

Gilbert, Ariz.

The toughest moment I’ve had in real estate was when I was showing a home and the seller was sunbathing nude in the backyard. Well, maybe that was the most awkward moment.

My clients and I just looked at each other, averted our eyes and told her we’d come back. She insisted that we take our time and made zero effort to cover up. We blew through the house as fast as we could!

We just shook our heads and chuckled when we got back in the car. (The clients) bought something else but still send us a Christmas card every year and ask if we’ve run across any more naked people!

Almost without fail, every difficult real estate transaction I’ve been involved in was as a result of the lender — and it is always with a lender we are not familiar with. Typically, this comes from our buyers who use out-of-state lenders or "Internet lenders."

Like most agents, we provide our clients with a list of four or five "preferred" lenders — those we know will get the job done right and on time; those with a proven track record.

While we cannot prevent anyone from using the lender of their choice, we always explain in excruciating detail what can go wrong if the lender does not perform, isn’t readily available, or doesn’t understand the rules and regulations stipulated in the Arizona purchase contract.

The lender is a critical component of a successful real estate transaction. Educating your client on this component goes a long way toward avoiding the nightmare real estate transaction.

Geena Becker
Realtor
William Raveis Real Estate & Homes Services
Avon, Conn.

I closed 13 short sales in 2009. I had one short-sale listing for one year. (The) balance due was near $205,000 and the property was then worth $145,000, with no junior liens.

I can’t count how many appraisers I had to meet at the property … I had two buyers in contract who both walked away (over) sale prices that (the mortgage loan servicer) had to told me (it) needed to get the deal approved.

(The servicer) would take weeks and weeks and weeks to give me a final approval — (which) never happened. I called three times a week, including Saturday and Sunday, to see if the approval letter was ready. I was pressing because I didn’t want the buyer to walk.

Each negotiator would tell me a different story, even when I would tell each negotiator the name of the last negotiator and exactly what (that negotiator had) previously told me over the phone. I still got a completely opposite response after I would be on hold for five to 10 minutes as they reviewed the file.

I found out much later, from my short-sale comrades in other parts of the country, that (some) servicers actually get paid the full (fees) monthly even though the borrower is in default, so it is in the servicers’ best interest to keep the file open until it forecloses since that is their income base.

My lesson learned? I had a woman contact me a few weeks ago to sell her house in a short sale. The house was now worth $125,000 on the market and she owed $275,000.

The first mortgage was with Ocwen and she had a junior lien of $50,000 with Bank of America … I told her that I could not help her and that she should call her bank and/or an attorney and apply immediately for (a) deed in lieu (of foreclosure). …CONTINUED

Lenn Harley
Broker
Homefinders.com
Maryland, Northern Virginia

My toughest transaction within the past couple of years was one in which I represented a homebuyer who had done a lot of research on the Internet before engaging my services as his buyer’s agent (for a) home in Maryland.

The buyer had committed, through an upfront loan application fee of more than $500, to a low-rate online lender, and a low-fee traveling settlement service provided by the lender.

Problems encountered were:

  • Inaccurate Good Faith Estimate from the online lender.
  • Inaccurate HUD-1 by the mobile settlement service representative.

The Good Faith Estimate from the online lender was overcharging my buyer client by about $4,200. It took three revised Good Faith Estimates from the lender to get a correct one.

(The lender) was unfamiliar with the first-time homebuyer benefits in Maryland and quoted far more for document preparation, appraisal review, etc., than in the original GFE.

At settlement, the traveling closing agent presented a HUD-1 that didn’t have the correct and latest lender fees, state transfer and recordation fee, and again overcharged the buyer by a significant amount of money.

Lesson learned: Be sure, as an agent, to review all documents provided by online lenders with sufficient time to correct any errors and overcharges, since they may not be familiar with local taxes, transfer taxes, etc.

Explain the traveling closing agent’s limitations to the parties. Traveling closers are notaries and cannot advise or change any information on the HUD-1. Make sure you can review the information on the HUD-1 with your buyer or seller client.

Working with online mortgage companies and a traveling notary requires a firm understanding of the loan and closing process.

Following that transaction, since it was my first with a completely online lender and my first with a traveling notary for closing, I scheduled a refresher class for my agents to reinforce the importance of understanding the GFE and HUD-1. 

Wayne Zelenak
Sales associate
Richard A. Weidel Realtors
Hopewell Valley, N.J.

My toughest transaction was a few years ago. I represented a buyer (with an) Eastern European accent. She was not familiar with our customs in real estate. She would ask questions (and) I would give her the answers and have to repeat them several times during the day.

She also called her attorney and mortgage representative with similar questions and answers. Finally, through tough negotiations, we went through the process and scheduled a closing. At closing, all the parties were waiting and she was an hour late.

What I learned is to be patient and persevere regardless of the temptations to lose your cool. Her attorney and I celebrated after it was over.

Robert J Russell
Realtor
Robert J Russell Real Estate LLC
Dallas-Fort Worth, Texas

My toughest real estate transaction was a short sale that took almost seven months from start to finish. The hard part about the entire process was trying to keep the peace between the bank, the seller, the buyer’s agent and the mortgage company.

We lost three good offers on this property in the seven-month process because the bank took so long to give any type of answer along the way.

The fourth offer, which was finally accepted, happened after numerous phone calls to the loss-mitigation person (and) getting her private e-mail address, which I used to correspond (with) her.

My advice to anyone dealing with a short sale is to inform the seller and buyer that short sale does not mean "short" sale, but rather "short-temper sale" because everyone’s temper in the process becomes short.

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