Two Sides to a Back to Back Short Sale Closing

There has been much discussion lately on Bigger Pockets regarding whether Realtors are worth the commission.  Some posters say the 6% commission is "scandalously high", while others support the Realtors.  I believe as in most discussions, the answer lies somewhere in between. 

We had a back to back closing a couple of weeks ago on a short sale.  Thanks to a great negotiator, we were able to purchase the home for $110,000, and sell the home for $145,000.  The closings took place the same morning (9/10), the net profit of $21,000 was in our bank account by 5pm that evening.  On paper, you couldn't ask for a better result.  However, two things stand out in this transaction that I would like to share with you.  This is part #1 of a two part blog.

Part # 1: The Realtor made it happen.

Part # 2:  The Title Company almost made it NOT happen.

Everything was working like clockwork.  We had a buyer, they were approved for FHA financing, and the mortgage broker assured me in writing from the underwriter that they would be able to accomplish a same day back to back closing.  We were waiting for the approval letter, and then we would get utilities on and clean and open the pool (required for the inspection and appraisals), have the home inspection, 2 appraisals and schedule the closing.

August 12 the approval letter arrived.  It contained no deficiencies for the seller, and was the price we expected.  We were given until Sept. 14 to close.  The lender gave no option of an extension, and stated if all funds were not received by Sept. 14, the sale would be considered null and void.  We notified the Title Company, buyer and mortgage broker that the closing would take place on Sept. 9.  The inspection was scheduled for 8/17 and the appraisals for 8/19.  Our listing Realtor got the electricity turned on in his name, and we got the gas and water turned on…..paying some deposits, and arranging for balances due to be paid at closing.

The Realtor had offered to get the pool cleaned and in working order.  We would reimburse him at closing for chemicals, and any filters, etc. that needed to be replaced.  The pool turned out to be in worse shape than anyone expected.  The Realtor spent 6 full days working on it, and we had to slide the inspection back two days to get it crystal clear.  The inspection took place 8/19 and everything including the pool passed with flying colors.  The appraisals were to take place the next day on 8/20.  Lots of time to get them back and still have the closings on 9/9.

When the appraisals did NOT take place, that’s when I was told by the mortgage broker that he had lost his status with the underwriter……but not to worry, he had another one that was going to meet our timetable.  I waited a few days, and then was told maybe they would go conventional, but don’t worry!  I spoke to the conventional lender, and found out they could not make the Sept. 9 closing date.  The soonest would be Sept. 21. On top of it all, the buyers had left for vacation and weren't even available to sign for new financing.  That's when I started to worry.  I told the Realtor we needed a buyer that could close in 2 weeks. 

Two days later on 8/27, the Realtor told me he had a cash buyer.  They agreed to write a back-up offer at the same price, and to close on Sept. 9.  We waited for the first buyers to return from vacation.  They returned on Sept. 7, and were very upset to hear that they did not have financing.  After much discussion, blustering and tears,  they finally agreed to sign a release of contract the following day.  Since it was late in the day on Sept. 8 when they finally signed, we moved the closing one day to Sept. 10.  Closing was early in the morning, and the new owners moved in the following day!

The Realtor was happy since these were his buyers and he got all of the commission instead of just the listing commission.  We also surprised him at closing with an additional $750 for all that he had done to make it happen, and we've already given him another short sale listing that we picked up in the area. (Tampa, FL)  Was this Realtor worth the commission?  Absolutely!  Without his work on the pool, quick action finding a cash buyer, and persuasion skills with the original selling Realtor and buyers, we would never had gotten it closed.  The homeowner would have had a foreclosure on her record, and we would have spent months of work with nothing to show for it.