Need help!! Have guy trying to use a financing contingency to get out of contract... - Posted by Vic

Posted by Laure on May 09, 2000 at 19:52:20:


Need help!! Have guy trying to use a financing contingency to get out of contract… - Posted by Vic

Posted by Vic on May 08, 2000 at 14:41:53:

I need some help here.

I recently entered into an agreement to sell a duplex to a guy, who I think is now trying to wiggle out of contract.

I signed an agmt. to sell him a duplex for $89,000. I had it appraised at $91,000 about 2 weeks ago. Well as it turns out, his father-n-law is also an appraiser. We were going to let his father-n-law do the appraisal required by the lender, because he could get it done very quickly. So, I faxed the father-n-law a copy of the appraisal I had showing a value of $91,000. Well wouldn’t you know it, the father-n-law looks at the appraisal & says - I don’t think this duplex is worth $91,000, I only think it’s worth $85,000 or $86,000. Now, he’s never set foot in the duplex, he’s basing this strictly off of the appraisal that I faxed him. My sales price to buyer is $89,000.

For the last wk or so, the father-n-law has been doing everything in his power to convince his son-n-law buyer that he should only pay 85K or 86K, if he buys it at all. I know this is going on because the buyer has been very wishy-wahsy over the last week or so. (he hesitated in giving my the deposit & some other factors, & I could tell by conversation it was due to father-n-law). I’ve done enough transactions to know when something’s not like it should be.

The duplex is one of the bigger ones (if not the biggest one) in the area. So finding comps that are the size of this one is very, very hard. Some come pretty close (within 100 or so sq. ft.), but none quite this size. But there are other 3 plexes & 4 plexes in area that are bigger than this duplex. My appraiser used 3 comps. of other duplexes in area & when reconciled, came up with a value of $91,000.

So I get a call from the lender today that the buyer is using, (one that I sent him to, by the way - this was my first time using this lender though). The lender supposedly received the appraisal on Friday. Today, he tells me that he spoke to the underwriter & the underwriter says that they’ll only loan on the 85 or 86K range (my isn’t it a coincidence that the lender came up with the same number as the buyer & his father-n-law appraiser).

Now, here’s the problem, I don’t believe the lender. I think the buyer is successfully being brainwashed by the father-n-law & told the lender that he only wanted to pay 85 or 86K& now I think they’re in cahoots together. So, my guess is one of 2 things - either he still wants property at lower price or he wants out of deal. Now I’ve asked him directly if he wants out & he keeps saying no. I’m not sure what to believe here. I did tell him though that if the lender will only loan 85 or 86k, that I’d take back a note for the other 3K, or I’d meet him somewhere in middle.

By the way, the buyer has outstanding credit & qualifies easily, so loan would be easy to get through & it is a conventional loan.

So, what do you’ll think I should do here. Should, I suggest a different lender? Should I tell lender that I need letter direct from investor stating that they’ll only loan based on 85 or 86K? (Would this even be any good, as I’m wondering if the mtg. broker could just tell investor to play along?) Should I threaten to keep the deposit? What do you’ll think???


Laurie, Carmen, Soraya & others… - Posted by Vic

Posted by Vic on May 09, 2000 at 14:06:43:

…first off, thank you all for responding. I always appreciate as many opinions as I can get.

Let me correct one thing that I wasn’t too clear about in my original post - the actual appraisal that we’re using is one that was prepared by someone other than the father-n-law. The buyer told me that the father-n-law wasn’t too comfortable doing the appraisal. At first I couldn’t figure out why, but thanks to you’ll, I now know. It didn’t even dawn on me that had the father-n-law actually done the appraisal that it could have been a conflict of interest. I guess it really wasn’t an issue to me because I know that when all was said and done I would have somehow gotten my total price, whether it was all up front or as a small second. It’s very difficult, if not impossible, to squeeze me like that. What I was doing, was exploring all options, & would have only reduced price if it was in my best interest to do so, such as for better terms. So I knew that in the back of my mind that I would either get my price or get terms that would work out better than the price.

Anyway, the buyer really wasn’t trying to squeeze me. He was just very confused & had some real misunderstandings, almost all of which were caused by the idiot lender. For ex. the buyer thought his closing costs were going to be over $7,000 because the incompetent (or should I say inexperienced) lender was quoting him a lower interest rate that required the buyer to pay 5 points in closing costs. Can you believe that - here you have a relatively inexperienced buyer dealing with a lender who is telling him - yeah I can lower your int. rate by a point, but it’ll cost you 5 points in closing costs. And this is on an inv. property. Stupid! Incompetent! (pick your adjetive).

Needless, to say, first thing I did this morning was get him to another lender, that I’m much more comfortable with. As of right now, everything looks good & looks like it’s going to work out like it should & without the aggravation, frustration & stupidity of the first lender.

Major lesson learned here: When dealing with a mortgage broker, always opt to go with one who has experience over someone who’s just aggressive, but inexperienced. Had the current lender not been out of town when we signed purch. agmt. I could have gone to her in the first place & avoided all this aggravation. Lesson learned though!!!

Thank you all for you help,

Re: Need help!! Have guy trying to use a financing contingency to get out of contract… - Posted by Laure

Posted by Laure on May 09, 2000 at 01:42:53:

I agree with Carmen, the father-in-law’s appraisal should be thrown out due to his interest in the deal. I would have another appaiser turn in an appraisal and compromise between your two. Actually, you could probably get a good appraiser to give you an opinion of value for only 50 bucks to show you are right on the money with the first appraisal. This is nickel and dime games that buyers try to play, trying to be the “intelligent purchasers”. Unfortuantely, it’s a lot of money to us to lose on a deal. A third appraisal should settle the matter, once and for all. And the father in law’s interest in the deal should be brought to light. Also, tell the buyer that you understand that it is a difficult time for him and that you want to sell, and he wants to buy, so let’s just get it done.

Laure :slight_smile:

Re: Need help!! Have guy trying to use a financing contingency to get out of contract… - Posted by Soraya

Posted by Soraya on May 09, 2000 at 24:41:43:

My opinion:
Sounds like the buyer et al think that you are desperate to sell and are doing “the old squeeze play” on you. (When you came back saying that you would meet them half way was the tip off. Telling them you would carry paper was OK.)
Is this the only potential buyer you have had?
I would call their bluff and stand firm on the purchase price and re-emphasize that you will carry back paper. I figure buyers are like busses, you miss one you get another. Of course I live in San Diego where it is a Sellers market and that may not be good advice for your part of the country.
Good luck.

Update!!! Need help from mtg. broker … problem is with mtg. broker/lender - Posted by Vic

Posted by Vic on May 08, 2000 at 18:39:52:

I just got off the phone with the lender & with the buyer. Here’s the real problem.

The mtg. broker, (who is very young & only 2 ys. exp.) said that the investor is the one that kicked back the appraisal. He said they did it because of Fannie Mae/Freddie Mac guidelines. The appraisal came in at 91K & my sales price to him is 91K, with me to pay 2k in closing costs. The appraisal that we are using is done by the same people that originally done my appraisal 3 wks. ago.

The mtg. broker also said something about the investor has a national MLS system that they use & they can run their own comparables to verify appraiser’s. Anyone ever heard of this?

Anyway, he says that they would be willing to loan $85,500 on it. I really have a hard time believing that they would bicker about a few thousand dollars like this on a conventional loan. In fact, I don’t buy it at all. Buyer’s has credit score in mid to upper 600’s. Something is not right here.

Think it might be time for a different mtg. broker. Anyone have any other ideas. Buyer is starting to get aggravated with whole situation & really doesn’t have a lot of time to be running from lender to lender.

This particular mtg. broker said he will look into it more tomorrow & see what programs might be available.

Open to ideas though.

Re: Need help!! Have guy trying to use a financing contingency to get out of contract… - Posted by Carmen_FL

Posted by Carmen_FL on May 08, 2000 at 16:57:08:

Is the lender saying he’ll only loan at $85-86K based on the borrower’s income, or baseed on the appraisal? If it’s on the appraisal, get another appraisal, or submit the one you already have - this guy should not have used his father in law in the first place, because he has an interest in the property (through this daughter). You may be able to huff and puff and make a case on that basis. If it’s based on the income of the buyer … then you can do what you suggested (take back a note for the difference). Can you talk to the mortgage broker, and get the “real story”? I’m not sure how deep you can get into the buyer’s private life without his permission, and you’d have to read your contract to see what kinds of clauses you have as far as keeping any of the deposit, etc.

Re: Laurie, Carmen, Soraya & others… - Posted by Larue

Posted by Larue on May 09, 2000 at 19:51:13:

Cool Beans ! I just found out today that one of my T/Buyers was approved and we are moving towards closing. Bonus round, the loan officer is interested in one of my houses too ! Don’t you love spring??

Laure :slight_smile: