Nightmarish isn’t exactly the word you want your real estate agent to use when describing your home buying process.
Unfortunately, that’s the word that comes to mind when I think about a client I helped back in 2018.
Gina was a 45-year-old single mother who had outgrown her 2-bedroom, 1-bathroom home in Lakewood. She was ready to graduate to a Craftsman-style home with a giant fireplace in Long Beach that had plenty of room for her growing son and aging mother.
Although Gina wasn’t ready to buy at that exact moment, the situation was looking ideal from a real estate perspective. She knew exactly what she was looking for and was motivated to start the buying and selling process.
Little did I know how complicated Gina’s case would turn out to be.
Still, like any challenge, it taught me a valuable lesson that I want to pass on to you—when buying and selling a home, make sure to disclose any and all loans, liens, or outstanding debts to your real estate agent.
Had Gina done that, she could have avoided weeks of uncertainty, stress, and near-homelessness. But I’m getting ahead of myself. Let’s take a trip back to 2018 to find out what went so wrong in Gina’s case.
As I mentioned before, Gina wasn’t quite ready to buy her new home. Notably, there was the issue of selling her current home. So, I set about preparing a net sheet for Gina.
If you’re unfamiliar with net sheets, they’re itemized lists of all the costs a seller can expect to pay when selling their house. Put another way, they give an accurate estimate of how much money a homeowner will end up with after selling.
Gina’s net sheet showed no evidence of additional liens or monies owed on her property. Because of that, the lending agency was willing to give her around $180,000 in equity to purchase her next home.
Things were still looking good for Gina.
Not only had her net sheet come out with a promising figure, but within a few weeks of listing her home in Lakewood, Gina had multiple offers.
The market was on fire, and Gina ended up selling for $460,000, a record sale in her neighborhood.
Riding high on the sale, Gina set about finding her dream home and found one that fit the bill almost immediately.
Located in the Belmont Shore of Long Beach, the property was a Craftsman complete with hardwood floors, a guest suite, and plenty of space for Gina’s family.
It was then, just as everything was coming together, that things started to get messy.
For starters, we found out that the net sheet we’d been working off of was completely inaccurate.
Remember, our calculations showed that Gina had $180,000 to buy her house. However, when we started the closing process on the Long Beach property, we found out that the figure was closer to $100,000.
Here, you’re probably wondering how we got the math so wrong. After all, it’s not like we were off by a couple of thousand dollars. The new figure was a full 45% lower than anticipated. What happened?
The first was that Gina had recently signed up for a Home Energy Renovation Opportunity (HERO) loan.
These loans were developed as part of an energy-efficient financing program. They cover energy-efficient home improvements like solar, heating and cooling, windows and doors, roofing, and landscaping.
Essentially, these loans allow homeowners to invest in cost-saving upgrades without having to pay for anything upfront. Rather, local governments provide the initial funds and property owners repay the loan over a period of time through property taxes.
Gina’s HERO loan was so new that it didn’t show up on her initial net sheet. She also didn’t mention it to me prior to the closing. As a result, we both got a bad surprise when the final calculations came in.
But the surprises didn’t end there. During the 2008-2009 recession, Gina found herself in some financial trouble and had modified her home loan.
That information was also missing from her credit report because it was so old. Still, it had a bearing on how much money she had available to purchase a new property.
As if that wasn’t bad enough, Gina had already sold her house. While she had negotiated a 2-month rent-back agreement with the buyer, time was running out to close on the Long Beach property.
On top of that, the seller of the Long Beach house had moved to Washington and didn’t want Gina moving in until the ink had dried on the title.
Unfortunately, it was going to take another month to get a new loan processed. That left Gina stuck between two homes while the paperwork (hopefully) got settled.
Given how far we’d come, I was committed to closing the deal for Gina. So, I proposed an unorthodox solution.
I told her to rent a storage pod, fill it with her belongings and park it in my office lot until the deal went through. She followed my instructions, but it turned out that she also needed space for her son’s car and a 26-foot UHaul truck.
To say that my neighbors were upset would be an understatement. The hairstylist next door was calling me every hour to complain about the lack of customer parking and my landlord was threatening me with eviction if I didn’t clear the lot.
During this three-week period, Gina, her son, and her mother had moved into Gina’s boyfriend’s two-bedroom house. Space was tight and nerves were fraying.
To make matters worse, the Whittier seller was getting upset because she had to make yet another mortgage payment.
As a result, she sent a Demand to Close Escrow. This document gives the buyer a minimum of three days to get their ducks in a row and close the deal. If the buyer isn’t able to close, they risk losing their deposit and the property.
The frustrated seller, the angry neighbors, and the stressed-out boyfriend—Gina and I were taking hits from every side.
Everything depended on her loan officer making a deal with $80,000 less than anticipated. Depending on the result, Gina would either be living on the street or moving into her dream house.
Luckily, the loan officer came in at the eleventh hour and qualified her for a loan with a good rate.
I’ve been doing mortgage loans on a regular basis since mid-2020 and I’m still not sure how he did it. Regardless, I’m forever grateful that he was able to help one of my clients buy her dream home.
I’m also grateful to Gina for believing in me and trusting that even though everything was falling apart, we’d close the deal.
Everything worked out in the end, but we could have avoided the drama had Gina disclosed all of her financials to me at the beginning of the process.
So, if you’re looking to buy or sell a house, my advice is to be as transparent as possible with your real estate agent. Even if something seems small or irrelevant, bring it up. It could be the difference between a pleasant buying experience and a nightmarish one.
