Broker Frustrations (Part 3)

March 20, 2009 · 3 comments

After several days of dealing with the drama of The Second Chance House buyers, their mortgage broker, and their real estate agent, things finally came to a head yesterday. Most importantly, we found out that there was an important piece of information about the buyer’s credit that we were never told — they have a lien against them that apparently the broker believes can be cleared, but it will still take several more weeks. Yup, they now want an extension through mid-April.

The best part is that the buyers feel like we’re taking advantage of them because we don’t want to extend closing. They think that because they’ve been inconvenienced by having to extend their current lease and not be able to move into our house early, that we’re the bad guys. They have no inkling that the fact that they have been lying about their credit situation has impacted us, and that refuse to accept that they’re in this mess because they made really, really bad choices.

I’m not a lawyer, judge, or ethicist, but given the fact that the three parties (buyer, broker, agent) have conspired to keep this pertinent information from both us and from the Department of Transportation — who has already paid the buyers several thousands of dollars to close on this house — I have to wonder if legal or ethical lines have been crossed.

We were given a pre-qualification letter from the broker when there were clear credit issues with the buyer; the buyers took money from the government for a closing that wasn’t imminent; we approved multiple extensions after being told we were just days from closing; the agent apparently knew about the credit problems but didn’t make the details available to us; the mortgage broker (and perhaps the agent) apparently were trying to stall the process and buy more time for his clients by “forgetting” to order the second appraisal; and the mortgage broker “went on vacation” for over a week, but then we found out that he was actually around the whole time.

I’m certainly not looking to cast blame (it’s completely our fault for not controlling this deal better and forcing the buyers to use our lender), but I hate to think that these buyers — and their agent and/or broker — will move on to another house and try to pull the same crap with another seller. I haven’t figured out what action I’ll take next, but am considering a number of options.

In the meantime, I have proposed a final extension option to the buyers: they can put down the rest of the down-payment into escrow as a non-refundable earnest money deposit, pay $100 per day in penalty for the late closing, and then have until April 10 to repair their credit and close on the house; or they can walk now and the house goes back on the market. While I’m not thrilled about continuing to work with these buyers, if they accept the deal, we’ll have enough money locked up to either ensure we close on the deal or ensure that we’re fairly compensated for the time the property was off the market.

One way or another, this will finally be resolved by midnight on Friday (the time the contract expires)…

3 responses to “Broker Frustrations (Part 3)”

  1. Ingrid says:

    Wow! This has turned out to be some drama.

  2. Jingle says:

    I feel your pain. I have a very similar situation going on, and like you I haven’t taken enough control of this deal. That ended today. Good luck with your deal.


  3. J Scott says:


    Nice to hear that you’ve come to the same realization I have. From now on, all buyers have two choices:

    1) Use my lender; or

    2) Face stricter contract terms around missing closing dates, earnest money amounts, and transparency in mortgage approval information.

    We’re also putting in place other processes that will allow us to stay on top of the deals and “control” them. I’m sure there are many good agents out there who can manage their buyers, but for those who can’t, we will ourselves.

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