Jim Valentine: Man-made escrow surprises

When things are moving fast in a real estate market significant changes can occur quickly. In a normal market things happen as expected during the course of an escrow. What happens when things change quickly is that foundations on which purchases were made change. When they do the values and character of the buyer are revealed.

Let’s start with interest rates. Typically, buyers get prequalified and go shopping. Finding a home in this market of scarce inventory can take a while. If you don’t stay in touch with your lender, or vice versa, by the time you find a home and get an offer accepted you might find yourself buying too expensive of a home as interest rates have been going up. Stay in touch with your Lender during the process.

Then there’s the lender that forgets to lock in the rate and tries to rationalize it to the borrower. The timing of locking rates is an art, but the lender must work with you to make the best choice you can given the information you have.

We recently heard of a lender that didn’t lock and the rate went up over 1%. The lender said he didn’t lock “in case the rate went down.” Really? Rates going down in this market? They will likely in time, but not soon enough to close an escrow. Buyer lost the house they wanted and lender only lost a loan.

Then there’s the agent that gets an offer accepted over a competing offer but doesn’t write in the offer a clause that says the buyer wants to view the property. Buyer comes to town and kills the deal. Conditions like that should be disclosed in the offer and the sellers can then properly evaluate the risk of consummating the deal. It is best to always disclose the assorted nuances to the other party and let them make fully informed decisions.

Agents can’t help when a customer zigs on them when they expected a zag. This can happen with a seasoned customer as well as a novitiate. The seasoned customer has practiced and predictable moves… until they zag. The novice just doesn’t know what’s happening or what to expect. They can get overwhelmed by emotion, details or panic. Either way, when things go the wrong way values and ethics can be compromised.

Its hard these days to keep people in a transaction based on values or ethics. People used to do the right thing because it was the right thing to do. Unless something changes beyond your control that affects your intended use, or changed circumstances that mean you won’t be getting what you bargained for, if you made a deal you’ve given your word. When you simply flake on a deal you weren’t the better businessman, that better person would have known and expected the right deal from the get go. Gotcha real estate will catch up to you.

Things happen in life. When they do everyone understands why you may be changing terms. When you simply change your mind it’s more about your character than good business. When you do that you also put your agent in a compromising position. Your agent worked hard to negotiate a successful meeting of the minds for you. When you flake you’ve undone everything the agent did for you.

Real estate transactions are written. It is important that the written contract memorialize your transaction wants, needs and intentions. Be truthful when you make an offer or counter an offer and you have a better chance of closing with a smooth transaction. These are tumultuous times that require everyone to be extra diligent. People are jangled by the economy and most don’t even know it. Take the extra step to make sure that everyone is properly protected and informed. The resulting transaction will benefit everyone.

Be nice and do the right thing. There is no right way to do the wrong thing.

When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless!  Jim Valentine, RE/MAX Gold Carson Valley, 775-781-3704.   dpwtigers@hotmail.com