It was a long and difficult close, with pitfalls at every turn. But with a willing couple who stayed calm, a lender that stayed on target and a title company that gave clarity to a muddy title we got there!
My buyers initially thought they could qualify for a VA Loan which allowed them to put very little in down payment and required the seller to pay some of their closing costs. For a Vet, it’s a great way to get into a house when money is tight. We found a house in a location that suited everyone – close to mass transit for her commute downtown, in a good school district for her daughter and close to his place of work. It’s a blended family with kids coming and going so the layout was important. Bedrooms upstairs for the kids that were not there all the time; a master bedroom on the main and another bedroom on the same level for the daughter that lives with them full time. We made an offer, and after a bit of back and forth it was accepted. We did the home inspection and some leaky pipes were found under the house in the crawl space along with some questionable electrics – all of which the seller agreed to fix.
At this point I discovered that the buyers didn’t quite qualify for the loan at the level we needed to be at and we were momentarily dead in the water. We backed out of the deal, earnest monies intact (because both the house and buyer have to qualify for a loan) and we started looking again, but at a lower price point. It quickly became apparent that finding a home with all the above pre-req’s was going to be virtually impossible. Our lender ran the numbers again, but using just the wife’s income and hey presto we were in business again! This time we were going to use an FHA loan which meant a 3% down payment, but otherwise much the same price point that we’d started with. Amazingly our original house was still on the market so we wrote up new paperwork that essentially was the same deal to the seller (in this iteration we wrote the offer $6,000 higher than asking, but had the seller paying closing costs of not more than $6,000 thereby keeping the cost of entry low for the buyers).
The new offer was accepted and feeling triumphant we went back to the house to inspect the repairs we had asked for the first time around and got a bit of a shock. In the interim period of two weeks, there had been a leak under the kitchen sink that had resulted in a messy repair behind the sink cabinet and even worse, the leak under the house had not been fixed. After three attempts everything was finally sorted out and we thought we were cruising to closing.
Well, some cruises are glassy smooth and some get a little choppy! It was at this point that we discovered that the owner of the house (whom we knew was flipping it) had not owned the house for a long enough period of time to qualify under FHA rules. He needed 90 days clear title BEFORE an offer could be written & accepted. At this point we had the appraisal done and underwriting was in its final stages. But the timeline was too short for FHA. SO (!) we cancelled the offer in play and simultaneously presented another, identical in every way – except now we were conforming to that 90 day rule. The listing agent did a stellar job of explaining to the seller what the problem was and we got all the new paperwork turned around super fast. Our loan officer had his work cut out moving file numbers and reassigning the appraisal to the new deal, but that all happened seamlessly. Closing was just days away.
And then another bump. As the underwriter was double, triple, quadruple checking everything, he ordered a new preliminary title report to ensure that nothing had changed in the two days since he’d seen the last one. And to our collective horror we found something HAD changed and everything screeched to a halt. The house had been the subject of a long drawn out bankruptcy and had eventually sold at auction, by the sheriff, to a group that had essentially bought the house sight unseen WITH liens attached. That first group then sold the house to our seller who as I mentioned above, was flipping it, super fast. So fast that paperwork was having trouble keeping up. The change in the preliminary title report we were seeing was simply the Sheriff cleaning up and confirming clear title from their end…. but it had taken them three months to clear. In most transactions this wouldn’t present a problem, but this loan, running through FHA needed to be super clean and it took 48 hours of talking between the lender and the title company to ensure that this was simply cleaning up on isle 10 and not mud that would stick.
We finally closed 3 days later and my clients couldn’t be happier! Everyone worked hard on this one, we had excellent communication between all the parties and trust that it would all come out right in the end. And it did!
I am both a Realtor and Interior Designer. I have transitioned from simply selling homes to selling what makes homes beautiful.
©Suze Riley 2013