BiggerPockets

Loan Contingencies - Protect Buyers EM

Monday, December 12

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MY RESPONSE; Buyers need to understand that having a competent loan officer that has a strong relationship with their underwriters/lenders is a key point when using financing to purchase. However, the loan commitment deadline stated in the financing addendum does not mean that the seller can claim the EM. If as the agent, you have negotiated a fair amount of time for the commitment to take place, and the loan officer can't meet that, the chances are good that they will not meet the closing deadline either. Cancel or amend for a longer timeline and find a better lender. loan commitment and loan approval are two very different things and if at the 11th hour, the underwriter requires something in order to approve the loan which the buyer cannot reasonably obtain, then loan denial does not mean that seller gets to keep the EM because you are past the commitment date. You still have the financing contingency in place should the loan be denied. You can have a timely commitment w/o the guarantee of full loan approval. So the financing contingency should protect your buyers EM as long as they have not breached any other area of the contract.

I believe it is "our job" to protect our clients interest which includes their EM. Our job does not end once a deal is made. Buyers have put their faith in their agent to assist, protect, and negotiate for them as we are the professionals. You are representing your buyers so it is not just up to them if you are providing all the information for the buyer to make their decision. Most buyers do not know how long it should take their loan officer to complete a commitment, or how long an FHA loan should take. They don't realize that working with the "big" banks take much longer due to their strict guidelines and u/w scrutiny that is required for fannie mae loans now. As agents we need to be aware of these time tables and make sure that we incorporate the appropriate deadlines into our contracts to protect our clients from EM issues and breaches out of their hands as they are responsible for them regardless.

All agents are not the same; most are.

Thursday, December 01

I read a posting today by another agent stating: "Meet the new agent, Same as the old agent." And while many times this can be the case, it is not quite the truth. The article goes on to say that the agent cannot control what the sales price is going to be and the seller needs to listen to their agent, and so forth - we have all heard it. However here are my issues with this post:

There are so many Realtors, many being cookie cutters of the other that it many cases this article points out the truth. HOWEVER, what the article fails to point out that if the old agent is a cookie cutter and treats every property the same, same area comps, same staging, same advertizing, that there will be an impact in the listing should the new agent have an edge. That edge can come from many avenues, whether it be education, experience, desire, networks in place, and on and on.

What I am trying to say is not every broker is the same, and not every Realtor is the same. The market is flooded with cookie cutter agents that know basic knowledge to pass the test, however do not know the legal words of the contract and how they truly impact their client. Maybe they do not stay up to date within their city to determine that values are going up or down ever so slightly, or that the battery plant in the area is under litigation for contaminating surrounding subdivisions. It could be that one agent just does not have the resources or funds to educate themselves beyond the "basics" or to make the time to create a marketing plan that is diversified enough to reach the many. Maybe they stick to their "old school" ways that have always worked and are unwilling to adapt to the new technology.

In any case, my point is that as a seller or buyer, its not just enough to be friends first, or pick an agent based on who your neighbor used because your needs maybe different. Or who answers the phone when you call from a sign. Research your agents background; can you find any personal information on them? What is their past experiences with issues? Do they have a web presence? Are they easy to locate should you need them? Are they so far away that if someone calls last minute for a showing they would be unwilling to make that concession?

Food for thought. 

Attorney office for Fannie Mae shutting their doors

Wednesday, November 23

Anyone hear about the foreclosure attorney office that is shutting their doors after an employee was offended by the office Halloween party and sent the pictures to the New York Times? the party was themed and everyone dressed up as "evicted homeowners" who fell into foreclosure. They had tents set up in the office with sleeping bags like they were now homeless. Signs posted saying things like "I'm not in foreclosure! I was never served!" Mocking people that were evicted from their homes.

Now, this is a case of a business being insensitive to a point of being obscene. Fannie Mae as well as a few other banks found out about this and decided this was not good for them and quickly removed all their accounts and their servicer accounts from this Law Firm, which essentially forced them to close their doors for lack of business.

I have worked hands on with persons being evicted from their foreclosed homes and it is a very sad experience for everyone. For a law firm to be so insensitive to individuals who for one reason or another were no longer making enough money to keep their home is heartbreaking. But do the 80+ employees of this law firm deserve to be penalized for their actions by losing their jobs? Ironic don't you think?