Some Home Buying Transactions Just Defy Logic

Some Home Buying Transactions 
Just Defy Logic.

     A call I received from a client a short while back literally left me speechless.  As my 6-year-old granddaughter would say, "there was nothin' but crickets" ...

     My client had questions regarding their mortgage that was already in process.  There was nothing alarming about the exchange ... that is, right up to the point where I mentioned it was time to order the appraisal.

     That's when my client said ... 

     "We need to hold off on doing the Appraisal, per my Agent".

     Of course I asked, "Why?"  The reply ...

     "Well, I've been doing some updating on the tile and flooring in the house.  Plus some drywalling and remodeling too.  I want it all done before we Close and move in".     

     My jaw literally dropped ... Chirp ... Chirp ... Chirp ...

     Now admittedly, their transaction had been a bit "unusual" right from the start.  Some of what made this property transaction (and it's subsequent mortgage process) a bit different from the ordinary transaction was: 

  • The Listing Agent and the Buyer's Agent were one and the same on the deal.  There was a Dual Agency Agreement in place
  • The original Contract was written in August of 2016 
  • The Contract was revised in September 2016 
  • The revisions made in September added a clause to the original Contract.  
  • The revision's clause read that the Contract was "Subject to" a successful rezoning of the Subject Property being completed
  • The rezoning was to include:  A division of a larger acreage parcel downward into 2 smaller parcels (5 acres and 7 acres, each of which would meet the minimum lot size requirements of the County Ordinance).

     Now it's important to note here:  All parties involved in the transaction (Buyer, Seller, Agent/Agency, Attorney) had been informed and fully advised that the Appraisal needed for my Borrower's financing would not be ordered until the rezoning/division of the property was approved and completed by the County in jurisdiction.  That Re-zoning/Division took the County almost 4 full months to approve and complete.  

     It's easy to understand why any Buyer might grow anxious and a bit frustrated during that amount of time.  Every Buyer's eager to move into their new home. They want to personalize their new home to their tastes.  Get started on any work or remodeling that might need to be done.

     But ...

 Talk to your LO. Don't put yourself at RISK!     My Borrowers, by taking the actions they did, had put themselves at risk ... both financially and legally.  

     They'd spent time conducting improvements on a property they didn't (yet) own.  They had extended themselves financially by purchasing construction and remodeling materials for the property.  The Seller had taken a risk by allowing it.  

     No formal or legal agreement addressing possible (negative) outcomes had been proactively signed by the parties involved at the time of Contract ... or prior to the work starting.  That remained the case throughout. 

     Prior to entering the property and beginning the home improvements, my Borrowers had received only a verbal "okay" and go ahead from the agent involved in the transaction.  They were told the permission was given (via the Agent) on the Seller's behalf.

     I learned of my clients' work and expenditures in their prospective home after the fact.  Work had already begun on the property.  During our earlier conversations and communications, my clients had never mentioned their intentions to take these actions.  Neither had the agent involved mentioned it.

     I'd never encountered this situation before.  I'd never had a client assume this type of risk prior to their legal ownership of a property or without a proper legal agreement in place.  I'd never had an agent suggest they take this action. 

     These actions (by all parties) defy logic and common sense ...  

     What happens if something goes wrong?  If one of the parties backs out?  Would the home have to be returned to its original state?  What happens legally at that point?  Or financially?  This situation raises so many questions ... and so many possibilities.  

     The division and rezoning of the property was approved and successfully completed by the County at the time of this call, so we had arrived at the point in the mortgage process where the property should have been appraised.  But unfortunately, the property and remodeling was now in what my clients referred to as an "in-between stage" of completion.  

     Tear-outs of old and additions of new had begun, but not yet been completed.  As a result, (and with no Agreement of any kind in place), the Appraisal had to be placed on hold until the work was fully completed.  Until it was done, we all waited and the Closing was held up even longer.

     Of course, the Seller related during this waiting time that they were "anxious and nervous" about the transaction.  They were placing pressure on the Buyers, the agent, and me.  

     They wanted to know if the Buyer was fully-approved? Had they received a "Clear to Close"?  They wanted an estimated Closing Date.  Unfortunately, under the circumstances, those answers couldn't be provided.   

     Something could (and should) have been worked out between the parties involved during the negotiation or Contract phase of this transaction.  Something that would have addressed potential concerns, issues, and outcomes.  The resulting issues could have been circumvented if a signed legal Agreement had been in place.  

     But this situation?  It was created by a lack of common sense.  It completely defies logic. 

     Do you hear crickets too?

     When in need of mortgage information, guidance, and service in New LenoxWill County, and elsewhere in Chicagoland/IL and WI, please contact me.  I'll be happy to put my 40+ years of experience and expertise hard to work on your behalf.
     I'm easily found at:

Gene Mundt

Mortgage Originator  -  NMLS #216987  -  IL Lic. #031.0006220  -  WI Licensed

American Portfolio Mortgage Corp.
NMLS #175656

Office:  815.524.2280
Cell:  708.921.6331
eFax:  815.524.2281


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Gene Mundt, Mortgage Originator, an Originator with 40+ years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: 

Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago 
and the greater Chicagoland region, including: 
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, 
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Romeoville, Naperville, etc.), DuPage County, the City of Chicago, 
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