The Tale of Three Homes
It was a bright sunny day. The phone rang and there was a lady on the other end. Her name was Smita, she was referred by one of my esteemed clients. She expressed her interest in buying a property in the bay area.
During the conversation I came to know that she and her husband Anuj lived in New Jersey, further she informed me she has joined a new company in the bay area and thus she needs to relocate. The relocation will be sponsored by her new employer. The company had a tie-up with a relocation company, which was to take care of her entire relocation. As a policy, Smita was obligated to work with an agent selected by the relocation company. However, she wanted me to work for their home search since they got a strong reference for me.
I heard her out completely and told her since I don’t work with any relocation company and I won’t be able to help her out. They can work with the relocation company and since she has been referred by my valued client, I promised to provide all kinds of support and information that may be required.
The Take Off
After two weeks I got a call from Smita & Anuj. This time they were happy to inform me that all this while they have been continuously exchanging mails with the relocation company stating their choice to work with me. And at last, the relocation company has approved their request to work with me as their agent. The loan agent was to be that of the relocation company. I accepted and we signed a contract.
The loan agent had to chase the bank since their property in New Jersey has got multiple offers and was also in contract with one. That should get closed in a couple of days. They were ready for the search but weren’t in a hurry. They wanted the money from the sale proceeds of New jersey property to hit their account first and then to look for a property here in Bay Area. I echoed their views.
However, casually they went for 3 open houses and there was one property that they fell in love with. The property had all that they wanted, it had a great neighborhood, great location, and great schools nearby. They came and shared with me their opinion about the house and I had to appreciate their choice. The property is excellent, however, I cautioned them that the price might go beyond their expected price.
Understanding the concern, they wanted to back out because, beyond their expected price, they weren’t ready to explore. However, I told them, to let me still try if that can be worked out. So, I contacted the listing agent, she remembered Smita & Anuj well since they met in the open house. After numerous conversations with the listing agent, she finally asked me to come up with the best offer.
The seller of this chosen property was an old retired lady. She owned this house for the last 30 yrs and had an emotional attachment to the property. Since she had to move closer to her family owing to her old age, she wanted to sell to a family who would love the property and take care of it.
Anuj & Smita’s maximum budget was 1.4 million. While I ran my comparable and worked out the area-based property prices, I found most properties got sold at a higher price. However, there was one property in the complex which was pending and the agent confirmed the selling price is 1.39 Million. So, we concluded to write an offer at 1.38 million so that it is absolutely fine in terms of appraisal and we shall also make a contingency as to the sale of the new jersey property.
Before writing the offer, I discussed it with the listing agent and found they have an offer of 1.55 million. I apprised the listing agent that my client isn’t approved for that and they won’t be comfortable making an offer. However, the Listing agent still insisted that I should write an offer for them. Informed her about the contingency and that if the contract got canceled my client gets back 3% of the contingency money and also that the current deal of the New Jersey home is in Escrow and should get closed sooner.
We made an offer of 1.38 million with the said contingency.
The listing agent asked to provide the contract that the property is in escrow and we did that she also asked if my clients can go up at 1.50. I made it clear that my clients can’t afford that.
Something happened and she felt that I could genuinely close the case for which she came and said that she is ready to accept our offer if we can go up to 1.40. We agreed with the contingency in place. And the contract was signed.
All of us were happy.
Everything was going fine but just a few days later over the weekend, Anuj started panicking, since the New Jersey property’s buyer has extended the close. He also informed that the buyers are not being cooperative and they aren’t letting the reason known for the extension. Real estate in different states has very different norms, back in New Jersey apart from the agent, attorneys are involved. But in the bay area, however, everything is dealt with by the agent only.
After a few days, Anuj mentioned that the buyers are backing out and they have sent a cancellation of the contract stating their loan wasn’t approved. I insisted that it must have been a non-contingent offer on the buyer’s part and they will hence lose the money. Anuj stated that over there, the lawyers and the relocation company aren’t quite professional and there was no mention of the contingency and the buyers could move out with the deposit money on cancellation of the deal.
Hence, it looked prudent to go ahead with the cancellation of this contract because once Anuj & Smita got into the contract our seller too went ahead and got into a contract for buying another property. Both the buyers had a 3% deposit made in the respective properties.
Thus, I sent a cancellation and on receiving the cancellation notice the listing agent got disappointed as they thought it was a sure-shot deal. We informed that there is always a chance, however small of things not falling in place and that’s why there was mention of the contingency (The sale was contingent on the sale of the property of the Buyer).
We didn’t want to delay the seller to go ahead in search of another buyer so that she doesn’t lose out on her deposit money.
For some reason, the listing agent still had trust in me and wanted to give us a couple of days before processing the cancellation.
I started getting into the nitty gritty of the New Jersey property to find a way out. I inquired about the number of offers and cash offers. Got to understand that they had 15 offers and even all cash offers too. I was wondering why they didn’t accept the all-cash offer? Even why didn’t they find out the source of funds to validate and support before getting into the contract? As information was received that the New Jersey proposed buyer wasn’t ready to share the appraisal, they weren’t supportive enough. It was a complete mess.. a mental turmoil.
Their agent in New Jersey also kept trying. We couldn’t communicate with each other due to a conflict of interest. My buyers were having sleepless nights and moved from pillar to post to get things done. I suggested Anuj persuade the agent to have a separate meeting arranged with the proposed buyer’s agent and get to know the concern and fix the issue.
That idea worked and the buyers agreed to meet. The property wasn’t appraised properly and it came 65k less of valuation hence the buyers were short on cash. That time Anuj & Smita went ahead and asked at what price were they ready to close. They replied that they can close it at $510,000 instead of $530,000 which was their asking price earlier. Anuj & Smita accepted the deal.
Their buyer agreed and tried to close the deal.
Though it was still undecided if their buyer would be able to close it, since they were already in contact with them, we decided to go ahead with our appraisal before it was too late. So, at once we worked on the appraisal, and the bank ordered the same.
Thus, to get the appraisal conducted, I spoke to the listing agent and asked if the seller would be home. On her confirmation, I went to the property and rang the bell. No one opened the door. After waiting for a while, I called the listing agent and was told that none seems to be home. She asked me to take the keys from the realtor’s lockbox. Accordingly, I followed the same and opened the door and the alarm went off. It was terrible, the hooter sound. So hurriedly I called the listing agent and told them about the alarm. The agent too panicked and she tried reaching the seller. The seller wasn’t responding and nobody knew the alarm code. Meanwhile, the neighbors came out and started questioning. I informed them that I’m an agent and the listing agent is on the phone. I think the seller forgot to disarm the alarm and we are here to do the appraisal. The alarm was loud. I quickly called the appraiser and asked if he would still like to go in and do the appraisal while this alarm is on. By then the neighbors had already called the cops since they thought it was an intrusion.
The appraiser was nice enough to tell he has faced worse and was ready to go in. By then the cops came over. The cops were present along with the neighbors and the alarm was on while the appraiser was appraising the property. All of a sudden, the alarm just stopped and I saw the old lady seller coming down from upstairs. I was shocked and enquired was she present at home? She suddenly broke into tears and divulged to me, that with all these uncertainties, she got into depression with the fear of losing her 3% money and so she took a number of sleeping pills. I didn’t want the cops to get involved and so I informed them that she is doing fine and the cops left. After a while, the appraiser also left.
Eventually, the old lady’s brother turned up, he was informed by the listing agent about the whole incident. Once her brother came in, I left.
I apprised Anuj of the incident and assured them that I will try my best to get ta proper appraisal however I informed them about how terrible was I feeling for the old lady. She believed in my buyers and made a deposit of 3% which she feared that she might lose and that is causing her depression and anxiety.
Finally, after a lot of back-and-forth emails and many trials, the sale of the New Jersey property was closed and Smita & Anuj got their money.
We informed the listing agent that we are moving forward and by then the appraisal came and it came 30k more than the offer we made. Which was great news for Smita & Anuj since they already had 30k equity on that.
The Air pocket
Originally our escrow date was on the 18th, but because of this delay, the lender communicated that they cannot close the deal on the 18th and they will close it on the 27th. I found it fine to go ahead since I had a word with the listing agent that there might be a slight extension of time but we didn’t mention the length of the days it might be allowed.
Then when I informed her about the 27th, she said it can’t work since the seller’s loan sanction expires on the 26th, and in this sanction, her interest rate is at 3% and post expiry it will be at 5.6 %. She will no more be eligible for the lower rate of interest, which will create havoc for her.
Now we were back to square one. She might just lose her 3%.
On our part, the contingency is now irrelevant since the listing agent has the proof of the home being already sold in new jersey and my buyers had received the money.
The risk of my clients and their prospective Sellers losing their respective deposit money was looming large.
The only way out is to get the lender to disburse the loan faster.
The loan agent showed a lot of protocols that need to be followed, for which the stipulated time was necessary. We told her that the money was ready, the appraisal is done, the conditional approval is there and we just need the final approval so why can’t this be done earlier.
Meanwhile, I shared the concern with the listing agent and she said she will try to pull some strings and I too tried my hands on it. While doing so I found out that the person we were speaking to wasn’t the loan agent herself but a mediator from the relocation company.
Eventually, we found the person who was processing the file. The buyers started following up with her. I kept following up with the line manager and also mailed to the president stating the urgency of the deal. They took action and the file started moving fast. The lady in charge of processing the file understood the situation and worked hard on it. And it was truly one of the historic closes from the lender. We got it processed only in 12 days and closed the deal on the 20th with a nail-biting win.
At last, the deal was closed and all ended well for everyone. They both have moved into their respective homes.