The Real Estate Client
More Than One Way To Buy A House!
(Part 2 of 2)
James Patton, CRS
(Continued From Last Month)
Mr. and Mrs. Lesia are purchasing from Mr. Fishborne, a For Sale By Owner:
"Let me tell you a tale about a home buying couple who wanted to relocate to Oahu from the mainland a few years ago. They had a very different style than the one that works in Hawaii, and their story is eternally instructive!"
The Closing. There was no closing. Thirty days into the contract, the appraisal came in. At $280,000! The lender required a survey, but it had not been included as part of the contract. The Lesias became concerned when Mr. Fishborne said he would not pay for it. Subject to getting a survey, the lender stated it would give a 90% loan on the property based on the $280,000 appraisal value -- not on the agreed purchase price, i.e. a loan of $252,000. The lender notified the buyer that closing might be delayed due to its unfamiliarity with lending in Hawaii. The buyers just needed to come up with the difference between the amount the lender would loan ($252,000) and the purchase price ($320,000) -- a total of $68,000 plus the closing costs -- when they had planned on 10% down! (and a full appraisal value). Mr. and Mrs. Lesia went into shock. The property "fell out" of escrow. The seller got angry and wanted to keep the buyer's deposit.
The Aftermath. Mr. and Mrs. Lesia lost momentum, had an expensive lesson and a lot of family disappointment, and did not relocate to Hawaii that summer. They still live in Oregon. They have vowed to try again, this time with their own agent (they contacted me by e-mail and registered on our Coco Isle Realty website at cocoisle.com). The seller, Mr. Fishborne, cancelled his home purchase in California. As a For Sale By Owner, he put the property back on the market at a "reduced price" of "only" $310,000.
Analysis. (1) Mr. and Mrs. Lesia knew of only a handful of worthy properties available in their price range. (2) A different neighborhood would have been more suitable for their kids. (3) They were not "represented" by an agent legally required to work in their interest. (4) They were neither pre-qualified nor pre-approved. (5) They did not know the right price to pay. (6) They did not understand local customs of who pays what, or what a typical sale includes. (7) They did not anticipate and plan for problems with the appraisal. (8) They did not anticipate and plan for possible problems such as encroachments, termite damage, etc. (9) They did not make the contract contingent on anything except the loan. (10) They acted on advice of someone not having their best interest in mind. (11) They put the entire down payment in escrow as a deposit instead of a modest sum of earnest money. (12) They made concessions without getting benefits in return. (13) They did not "shop." (14) They acted on impulse. (15) They did not assess alternatives before acting. (16) They did not start with an offer less than asking price. (17) They did not choose a local lender. (18) They put the seller's needs before their own without realizing it. (19) They worked for 8 months through an attorney to get their deposit back. (20) They did not have a home inspection, termite report, and other tests. (21) They were not aware of current real estate activity in the immediate neighborhood. (22) They found the home they wanted before they sold their existing home (without being able qualify for a "bridge loan") (23) The Lesias could have made their time frame and gotten more house for less money and less trouble with an experienced agent working in their interest. (Next Month -- The Right Way To Buy A House! -- Part 1)
James Patton, CRS
Toll Free (800) 997 - 8701
Call Today To Get The Process Started
©2003 Coco Isle Realty
