Ardell- You are obviously a great buyer advocate but please tell me specifically what you mean by the above statement.

Thanks for clarifying the difference. So if the loan program is entirely wrong…it doesn’t have to go back through underwriting? That seems odd.

Real estate will never cease to amaze me.

It is inexcusable. In seven as years as an LO, I maybe have had 1 or 2 times when I had to call my EO apologizing like crazy to say we would have last minute docs. It was a couple years ago during the refi craze. And the other time was a 4 day close (court house sale). But both times, the EO knew about it in advance and we sent instructions over before the docs. Plus, my EO knows its the exception and not the rule with me.

I didn’t have a great relationship with LOs when I was in escrow/title. As the manager of the branch, I did not encourage refi business from LOs who would “wear out” our EOs with last minute docs. There were only one or two LOs that we would make an appointment for BEFORE having loan docs. In escrow, you can be burned so many times by setting up tenative appointments for docs that never show up in time…meanwhile…the clients are fuming in your lobby. It’s really a screwy system IMHO!

I think every LO should have to work at least one week in escrow…maybe during month end! Most have no idea just how tough your jobs are.

When I talk about docs being wrong, I’m talking about misspelled names, incorrect addresses, wrong vesting etc…

Changing the fees in the manner we were describing requires the file to go back to underwriting, which takes much longer than correcting some of the other errors mentioned above.

For example, yesterday we had loan docs submitted to us at 3:15 pm and the buyers signed at 4pm. If there were issues, when in the world would we have time to correct problems? This file was supposed to close yesterday but now will close on Monday, hopefully.

Yes, it is feasible to use the initial 1003 to compare, but realistically, at the time of closing the initial 1003 is not looked at by escrow. Escrow is not in the position nor is it the role, nor has the time or energy to look back and start a big argument regarding initial fees vs. final lender/broker fees.

The problem,arguably, is that addendums written in the spirit of “seller to pay up to $10K in closing costs” is too open ended. For buyers that is typically construed as “I’ll get all 10K for increasing the sales price by that much.” Unfortunately, the buyers and their agent don’t anticipate that all the 10K may not be used up.

That can create several problems of which moves into the realm of Russ Cafano and Craig Blackmon’s professional services.

How many agents out there try to resolve this problem by having the seller give the buyer a Home Depot gift card after closing or something else after closing? (that $1,000 lawn mower in the garage sure looks nice)

Even when I write in “any excess to be deduction from sale price” I need to do a price change addendum saying “price to be” reducing by the excess, and have that signed by all parties.

I have had agents say “Can’t escrow do that?” NO Escrow cannot initiate contract addendums. They can have the addendum signed at escrow, but they cannot introduce or prepare addendums.

In your scenario I’d say both agents screwed up. No agent worth their weight in peanuts would permit a seller to sign a Purchase and Sale Agreement without knowing the exact amount of the seller contribution.

Often buyers would like it to say “Seller to pay all closing costs”. I hear that a lot. Whether my client is the buyer or the seller, I explain that number needs to be defined as a dollar amount. Once it is a dollar amount, that amount is “carved in stone” and factored into price negotiation.

I explain to the seller that the number, if agreed to, is gone. I do not give the seller false hope that some might not be spent on behalf of the buyer. The intent of the parties at time of signing is, that the buyer benefit from those funds and the seller adjust the price accordingly. Even when the costs aren’t stacked on top of price, the seller’s net is calculatd without the credit prior to signing. So the “meeting of the minds” understanding is not “gray”.

Here’s another factor from the seller agent side. IF the buyer asks for an UNREASONABLE amount to be paid for buyer’s closing costs, that is a HUGE RED FLAG that the sale may not close.

Look at your example. The sale never closed. In my experience sellers are a whole lot more worried about a sale not closing at all, than grabbing a piece of that credit. An agent should know when the credit is out of whack and what that means. It means these costs are higher than normal, because this buyer may have a pre-approval or pre-qual letter, but it’s going to be a “hold your breath, cross you fingers and toes” kind of transaction.

You don’t give credit for people wanting to keep their end of the bargain. You assume that after a seller agrees to give a buyer X towards closing costs, that the seller wants to later renege and NOT do that. That has not been my experience.

When I represent the buyer and the lender says costs and prepaids will be $6,300 I look hard at the GFE. Sometimes they use 30 days for interest, even though the closing date is the 25th. If the agent just gets a number from the LO, without looking at the GFE, that is when there is most likely going to be a problem.

I rework the GFE and have never had a problem. There are just as many ways to insure NO problem as there there are ways to MAKE problems. And it’s all in the agent’s hands, because the agent is the one writing the Purchase and Sale Agreement.

If everyone has to scramble, the agent wrote it wrong in the first place. The agent should pay for their mistakes.

I did have one where the costs were a tad lower than expected, because someone was added to the contract while in escrow. That decreased the costs just a little, and there was an excess of $163. I decided it wasn’t worth going back and forth with the seller about, and gave the buyer this choice. We can tack on a home warranty for $225 or I can just pay you the $163 and let the seller have it. They opted for the warranty.

If it’s a $25 overage say, much easier for me to just let it fallback on the seller side and for me to cover it on the buyer’s side. All too often agents just want to sit back and wait for their check once a transaction is in escrow. That is a fall back to when all agent’s represented sellers, and unfortunately many agents are trained by people who use seller tilted logic and training practices.

Buyer Agency is not being taught anywhere. Handling these situations from the buyer’s standpoint, is not being taught anywhere. Except maybe…here on RCG

I actually have a post “in waiting” on my other blog about an experience I’m having right now with an escrow co. Because of my background, I always get loan docs out as soon as possible. In this case, EO has had them since April 16. I had to call several times on Wednesday and Thursday to ask for a HUD. The EO would not respond until I called the selling agent (his company has an interest in the escrow company)…funny…she started communicating then. Our transaction is closing on May 2. She wasn’t going to sign the buyers until May 1 at 3:00! She complained to me about not having time to prepare an est. HUD because of being so buys and “month end”. I do relate…that’s why she’s had the docs since April 16!

We need time for our funding department to review the docs after signing…so now she’s signing the clients at 5 on Monday.

Escrow is so important. It’s the tail end of the transaction and if it’s not done right, it can leave a bad taste in everyone’s mouth.

The ironic part is this company (it’s not a title/escrow co) that is owned by a large real estate co. sends out tons of email updates… worthless if it’s not backed up by enough staff who can do the job.

That’s all I have to say!

Tim and Lynlee, How about my idea on Comment 17 (when month end is over, of course)!