So, sometimes, you just have to shake your head and offer to walk away. It may sound stupid. It may seem short sighted. I suppose I am sick and tired of the “inside” games that continue to be played.
I represent a buyer. He is working with a lender that offered him a $10,000 grant. He applied for a loan and was approved. I took him out and we visited many properties. During the course of our time together, he shared that a year ago, he had written an offer and it was going to be submitted. A co-worked asked about his financing at that time. He shared that he had a great deal. His real estate agent had recommended a lender that was offering him a wonderful loan. He would only have a 3% interest rate for the first few years and then it might go up depending on the market.
His friend pointed him in the direction of another lender and he was shocked to discover what he was almost under contract to do. He walked away from the offer. He walked away from the agent. He walked away from buying and joined the hundreds of thousands of potential buyers….on the fence.
So, here he is with me. He has an FHA loan approval. He has a grant. He has a ratified contract.
Then, today, the news comes in. The federal home loan bank or some other entity had put a hold on distributing the grant money. I don’t know the details. I am a Realtor and not a lender. I just know the $10.000 went poof. My client spoke with the lender. The lender suggested that maybe we could renegotiate the ratified contract and increase the sales price by $5,000 and ask for a $5,000 seller credit.
What to do?
I sent my buyer the following letter.
I spoke with XMXX. He shared his thoughts with me. He understands that this is a terrible blow to you. He asked if the seller might raise the price to $155,000 and then offer you a credit of $5.000.
I don’t want to go down that road. I am not comfortable juggling sales prices to accommodate the bottom line. It may seem like a harmless maneuver which will allow you to roll some of your closing costs into your loan. It also means that you are paying more for the property than it is worth.
They have accepted $149,900. I do not believe it is sound advice to suggest you might finance $5,000 over 30 years. I do not believe in the shell game that was in use in the past. You offered a price and they accepted it.
You have suffered a set back regarding the grant. It was unforeseen. It is a discomfort now. It requires that you revisit your goals and financial situation.
I have prepared your offer so that you can still walk away without any consequence based on the review of the condo documents which we should receive this week. The review contingency allows you the right to rescind your offer.
If the grant setback puts you in a position in which you do now wish to proceed, I will understand.
If you want to pursue purchasing the property by offering more and receiving a credit back, I will be glad to recommend another agent that could handle that for you.
It would require you to prepare another offer for the $155,000 with $5,000 back as a credit. It would be considered a back up offer. I would then prepare a release for your first offer and step away from the transaction.
I can not guarantee that if you release them from the offer, they will accept your back up offer. They may have a back up offer for more than the $149,900 stipulated in your contract. If you wish to proceed with the contract, I will work with you.
Please understand that I am not indicating that the process of offering more than the property is worth and receiving credit back is illegal. I really don’t know. I do know it is done, prior to ratification, often. I am only sharing that I do not believe it is ethical.
I think it exists in the shades of grey.
Operating in the shades of grey is not the way I do business. You hired me to guide you and protect you and advise you.
I am doing that job.
So tell me folks… how do you play in this sandbox?