(Flickr photo by litherland)
I have no one to blame but myself after I took on a new buyer.
Cindy is an acquaintance who e-mailed me one Friday saying that she was toying with the idea of moving out of her nearly $4,000-a-month rental to purchase an apartment on the Upper West Side. Could we chat sometime? she asked.
I spent a couple of hours with her the next day explaining the process to someone who had lived overseas for decades and, like any first-time buyer in Manhattan, knew little about co-ops and condos, let alone what she needed to do to buy one.
It was a good conversation, in the course of which I went on at some length about steps that Cindy hsf to take to obtain a mortgage, retain an attorney and make an offer before going to contract.
She indicated as we talked that there was some urgency to get moving because of an overwhelming work commitment that was to command her full attention as soon as the following weekend.
Naturally, I had plenty of questions for my new client. I asked about her price range, her credit score — close to 800, she reported — and her income, both from earnings and investments. She gave me a figure that seemed fine to me.
And that’s where I made my first mistake.
I knew that she had retired from her lifelong profession and now was freelancing in another one with apparent success. (“Freelance” is a dirty word to lenders, though an income stream of at least two years of sufficient size would mollify most.)
Although I asked her to fill out the financial statement that I sent her, I failed to require her to fill it out at the outset, to, as we say in the business, qualify Cindy to make a purchase in her price range. Without having some assurance of her resources, I could well be embarking on a fool’s errand.
I nonetheless searched listings with her, discussed them with her at length and left her to see some of them at open houses that Sunday. On my own regular walking tour of open houses, I looked at a couple — 43 blocks apart — that might have worked for her as well.
I also continually urged Cindy to get moving with a lender and lawyer in the course of spending quite a bit of time arranging for us to see apartments that interested her over the next week and accompanying her on those visits.
During that time, she latched onto one unit, and I made an offer for it on her behalf.
As you might have guessed, however, she still hadn’t received a mortgage pre-approval because providing necessary documents did not seem to rank high on her priorities. Nor had she even called or decided on a lawyer.
Still, I conducted protracted negotiations in which I disclosed her loan and lawyer situation. We were under the gun because the seller had not just another offer at a lower amount than Cindy’s: He had an actual contract awaiting his signature.
The seller said that he wanted Cindy to be the buyer. Although she was pleased, none of the time and energy I had expended on the search and negotiations turned out to matter one whit: The lenders would not approve her, not even for close to the number she needed.
Literally within hours of being told the seller would accept our offer as soon as we identified Cindy’s lawyer and sent along a loan pre-approval, we had to withdraw it.
I suppose I was caught up in her sense of urgency in my failure to follow at least one of any good broker’s rules. For neglecting to put the horse before the cart, shame on me.
Talk about a fool’s errand!
Tomorrow: Another mistake
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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022
M: 347-886-0248
F: 347-438-3201
Malcolm@ServiceYouCanTrust.com
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