Every real estate transaction has challenges. Even the smoothest of deals may have a problem to be solved – whether it’s helping your client decide between lenders, a discrepancy in a financial document, understanding a specialized home buying program, or peeling paint found during an appraisal. Sometimes, one issue will snowball into another and the process becomes more complicated. Here’s a story of how one issue snowballed into a literal real estate avalanche of challenges, and how both me and my client survived.
It was a long-standing dream of Sarah’s to buy a home for her family. Sarah joyously told me about her big, tight-knit family and that she was already envisioning the get-togethers and holidays she would be able to host for them. She was so grateful to her family for carrying her through those years after her military retirement, and recognized the sacrifices they both made during her years of service in the armed forces – including her tour of duty during the Gulf War. She expressed sincere excitement that after so many years, she finally had an opportunity to make her dream a reality.
Sarah and I connected over our mutual love for our families, and I truly hoped that this decorated veteran would get the home she deserved. When we realized we were both stood up, I offered Sarah my help and we decided to work together.
At the start, Sarah was set up for success. She had an approval from Wells Fargo – a big direct lender, which at the time held a lot of weight because it led to positive things for a buyer including an automatic underwriting system approval, a pre-approval, and a FICO score disclosure. The direct lender associate at Wells Fargo was responsive and very knowledgeable about the various resources and programs that benefit and encourage buyers – especially first-time home buyers – to make home ownership a reality. In addition, because she was a veteran, Sarah had a 0 down payment loan. The process with Sarah looked clearly paved.
Sarah and I enthusiastically toured about 20 houses before we found her dream house in Torrance. It was the perfect size, in a great neighborhood, close to family and friends.
But as any smart home shopper would do, Sarah wanted to shop the rate to find the best deal and the lowest rate possible. She was persuaded by a fast-talking loan officer who filled her with promises – better rate, better fees, and a better situation.
The first snow begins to fall
When Sarah told me she wanted to go with the new loan officer, I was hesitant to back her decision because she already had a clear path laid out with Wells Fargo. While I understood why she would choose a deal that presented better savings, I did not want her to discount the customer service, responsiveness, experience, and knowledge that her lender at Wells Fargo had.
Sarah was set on the new loan officer, but I was able to convince her to stay with Wells Fargo while also getting an approval with new loan officer.
The Wells Fargo associate helped Sarah to apply for a program called the Mortgage Certificate Credit, which provides home purchasers with a significant tax credit in connection with their home loans. This would benefit Sarah as it would adjust payroll deductions so that she could increase her net take home pay.
The Wells Fargo associate was trying to wrap up the sale with Sarah because he was going on vacation and would be out for 10 days. So Sarah relied fully on the other lender.
Unfortunately, the new loan officer had no experience with the Mortgage Certificate Credit program.
The snowstorm begins
The seller was putting the pressure on us because they were banking on the money from the sale of the house to move. We were already delayed because we began working with this new loan officer, and, because Sarah has a VA loan, we did a 45 day escrow.
As we entered the due diligence period, we began getting our ducks in a row – home inspection and appraisal order, etc. – and the finish line to the home of her dreams was in Sarah’s sight.
Then, I get a call.
The loan officer is backing out. He isn’t able to get her loan processed and the benefit program is too complicated for him to handle. For him to pull out at this stage of the process clearly showed that Sarah was never a priority for him. His clients are disposable, and frankly, I am embarrassed that everyday hardworking people will also encounter him in the industry.
For me, Sarah wasn’t just a client. I felt an obligation to honor her dream. She afforded all of us safety during her military service and continued to show care for the community by working at the VA. At the very least, and of all people, Sarah deserved this chance.
The blizzard
I went back to Wells Fargo, and since our associate was on vacation, we asked the seller’s agent for a two-week extension, which rightfully frustrated both the agent and the seller, because she was on board with us the moment we had the Wells Fargo approval. They reluctantly agreed and we pushed forward.
When our Wells Fargo associate returned, we got back on track. The loan was conditionally approved and we are getting ready to close. Because this process had been extended far longer than we had planned, we provided updated paperwork for the loan processing.
Unfortunately, Sarah’s updated paystub showed a writ of execution – showing that wages were being garnished to pay for a judgement someone had filed over her and recently refiled in the amount of $6,000. (Read more about why being transparent with your broker is key to a successful home buying experience! **Link to Full Disclosure blog post**) This affected her debt-to-income ratio, and as a result presented a huge challenge. There was no way around the judgement, so the Wells Fargo associate said it had to be added to the closing costs.
The snowball
We were now in day 60 and the seller was done – she wanted to cancel. On top of this, because our Wells Fargo associate was so focused on getting the loan through the approval process, he overlooked the appraisal order.
There were two items on the appraisal that needed to be resolved – peeling paint and smoke alarms. I decide, as a new real estate company, and Sarah being a valued client, that we would cover the cost of resolving these items.
Being a new broker myself, I didn’t yet have all our systems nor vendors in place. Since I didn’t have an on-call handyman, I headed over to Home Depot near our offices in Pico Rivera and found a laborer who agreed to paint and replace the smoke detectors. I bought the tools and supplies he needed for the job, then I drove him over to the home in Torrance, and dropped him off.
When I drove away, the worker realized two things: the paintbrushes were left in the trunk of my car and he forgot his cell phone.
In the meantime, I decided to visit my family in the Valley for a few hours, completely unaware that work couldn’t be completed.
Luckily, the seller happened to stop by the home and she called her agent who gave the worker my number. He was finally able to get a hold of me four hours later. Because I was in the San Fernando Valley in the late afternoon, it took me another one and a half hours to get back to Torrance. When I finally got there that evening, the worker was reunited with the paintbrushes, and we stuck it out through the night to get the repairs completed – in the dark.
The avalanche
We got everything done, the property passed code, and the closing costs came in.
It’s at that point that Sarah turned to me and said, “Herb, I don’t have the money.”
Sarah told me she had been trying to borrow the money from family, but she was too embarrassed to tell me. My heart sank – not just because we worked so hard over the myriad of hurdles to get to this point, but because I was honestly crushed for Sarah. It was gutting to hear this retired veteran – a grandmother, who continued to work hard at the VA in care of her community – speak with a sad surrender in her voice. She was giving up on her dream to this financial reality.
The shovel of survival
At this point, we hit the end of our extension and the seller was in no way going to give us any more time. I asked Sarah for her trust and deep belief in me to get this deal closed. I told her we needed to release her earnest deposit of $5,000 to the seller to buy ten more days. She was incredibly reluctant, but trusted my direction.
In releasing the deposit, I knew I had to pay Sarah’s judgement through the escrow with my $10,000 commission to close the house. But I want to make clear the reason I did that was not because I needed to desperately close a deal – we were quite busy at that point – but because Sarah of all people deserved this house. The ten days allowed us to the time wrap up the process.
And we closed.
Sarah was so relieved, so happy, and incredibly grateful. She was nearing her retirement from the VA and looking forward to spending her golden years enjoying the company of her loving family in the home of her dreams.
The melt
Throughout the process, I knew the road to close would have happened way earlier, with no roadblocks, had we stayed with Wells Fargo from the beginning. The journey to getting Sarah’s keys in hand wouldn’t have snowballed into such a chaos. But as with all challenges, we learned a lot from that experience and it shaped PLF into what we are today.
While I do think people should absolutely seek the best offer and deal, I encourage you to go with experienced professionals who understand the home buying process. There are so many salespeople who can take advantage of first-time home buyers. They aren’t invested in their clients’ dreams, but they are interested in a commission.
At PLF, I now set my clients up for success from start to finish. I connect them with professionals I trust, who will give them great rates and fees, so that their path to their dream home doesn’t hit the roadblocks Sarah encountered in her journey. In fact, we now have an in-house lender so that the real estate and financial transactions are seamless.
As you know, one of the cornerstones of our company is FAMILY. When you work with us, you are part of the PLF family. We don’t want our clients to go through hardship.
We will take care of you.
