Poor Choices Can Blow a Deal

Buying a home is a personal choice, but it’s also a significant business decision - and buyers are wise to remember this. That is why it is critical to make good choices when selecting the key service providers involved in the transaction – the lender/mortgage loan officer, real estate agent, and home inspector. A poor choice in any of these three service areas can actually blow a deal for the buyer.

Timeliness, organization, effective communication, knowledge, and accessibility are key traits to seek in each of these professionals. If you were responsible for the hiring decisions at your company, which candidates would you bring back for a second interview? Consider the fact that you are actually the CEO of your own life, and your hiring decisions could impact the quality of your life for many years to come.

No purchase can hope to take place without the necessary funds. Make sure you have chosen a reputable lender, and not some institution that no one has ever heard of. Sellers are very wary these days when it comes to lenders, and rightly so. There are simply too many devastating stories of buyers and sellers sitting across the closing table from one another for hours, waiting for the funds to arrive via wire. Countless transactions have been delayed by days or weeks when one lender cannot close the deal and a new lender must be found to eventually save the day. Imagine that scenario as a first-time buyer when your apartment has new tenants arriving, and you’re now without a place to live - with all of your belongings loaded on a rental truck.

In addition to selecting a credible lender, it’s vital to receive a pre-approval letter. A pre-qualification letter is meaningless to sellers. They want to know that a lender has actually pre-approved you for financing. Offers with pre-approvals will likely be given much stronger consideration, and some sellers won’t even look at an offer without a pre-approval letter.

Be sure to receive a GFE (Good Faith Estimate) from your lender for all fees associated with the lender, loan program, and closing costs. You will want to have this information handy as you negotiate an Offer to Purchase. You must be aware of the money you will need to bring with you to closing, in the event that a seller does not agree to pay your closing costs, and you still want to proceed with the offer.

Dates and deadlines in an Offer to Purchase are critical, where time is often of the essence. The professionals you choose must be accessible, organized, and timely in the delivery of their services. Missing deadlines or waiting until the last minute to satisfy contingencies can have dire consequences. Remember that an Offer to Purchase is a legally binding document, and not to be taken lightly.

It is not your job to know the ins and outs of loan programs and financing options. It is not your job to know the laws that govern real estate transactions in your state. Nor is it your job to know if the property you wish to purchase is safe, structurally sound, or worth its listing price. It is your job to select the professionals who do carry those responsibilities and the proper credentials. Take time to research your options. Ask friends, family members, and trusted colleagues for referrals. Attend open houses or research real estate companies and agents online (see my post, “All Agents are NOT Created Equal.”)

Do your best to make wise decisions, but don’t beat yourself up if you wind up making a poor choice. A worse choice is to sit back and do nothing once you recognize the problem. Always remember that if you made the hiring decision, then you can also make the firing decision. You can choose a different lender or loan officer. Due to complexities associated with real estate law, you may need to take an extra step with switching agents if:
1. You signed a Buyer Agency Agreement,
2. You’re in the middle of a transaction, or
3. You plan to write an offer on a property that was shown to you by that agent.
If any of these situations apply to you, contact the agent’s broker, who will reassign and oversee another agent who will better meet your needs.