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How I Saved the Deal: Expect to be Surprised with Surprises

posted Jul 13, 2018, 2:43 PM by Joyce Evans   [ updated Jul 13, 2018, 2:45 PM ]
Here is the latest in a series of occasional articles by PSAR members on the topic:
“How I Saved the Deal.”

By PSAR 2018 President-Elect Robert Calloway

As a military veteran, I enjoy working with clients who are active duty, recently discharged or retired veterans. I believe that military-focused REALTORS® can best guide veteran buyers and sellers take advantage of a variety of benefits and advantages for those who have served our country. For example, VA loans offer unique eligibility requirements, which are familiar to experienced real estate agents with a military background.

Recently, I helped a young disabled veteran purchase her first home. The process wasn’t entirely smooth and I learned some valuable lessons along the way, but we saved the deal. Here’s what happened:

Because her available funds for the Earnest Money Deposit (EMD) were relatively small, the deals we pursued didn’t work out. We kept getting upstaged by all-cash buyers. We started by targeting several specific neighborhoods but then continued to expand the search by adding more communities until we were looking countywide.  

One day I learned about an El Cajon condo complex that was receptive to veterans and, at the same time, trying to raise its owner-occupancy ratio. As you may know, when a condo development has a certain percentage of units occupied by owners, rather than owned by investors and rented to tenants, then Federal Housing Administration (FHA) rules for financing change favorably for the entire development. It is FHA’s position that owner-occupants serve to stabilize the financial viability of condo communities because owners are less likely to default on their obligations to homeowner associations in comparison to non-owner occupants. So, for my client, the prospects were looking good. But, then, came a few surprises, which prolonged the transaction.

The first surprise came when the condo developer selling the units required us to use their purchase contract forms and not the California Association of REALTORS® zip forms (yikes), which caused a couple of days delay, however, they did accept our offer. Then, the buyer changed jobs in the middle of escrow, which meant more delays waiting for her new paystub for qualifying purposes. Then, her disability rating was increased to 100 percent disabled, which meant she received a nice-size windfall. However, she decided to use the windfall to pay off her some of her debts instead of saving the money until the deal closed, which would have improved her financial situation, as preferred by the lender, this could have also lowered her interest rate and monthly payment.

The best advice I can offer to any REALTOR® who wants to save the deal is you can never communicate enough with your client. It’s best to over-communicate. Looking back, I would have advised her on the consequences of a job change and saving the extra money for a down payment.

Throughout this transaction, I also was reminded about the importance of preparing for surprises with several options in place. My own personal experience as a veteran, and good relationships with a team of trustworthy pros, including VA lenders and veteran-friendly home inspectors and appraisers, helped save the deal.

In addition, this client saved on her property taxes because the assessed value was reduced, thanks to County Accessor-Recorder-County Clerk Ernie Dronenburg, who has several special programs and exemptions available for veterans.

If you want to save the deal, have options ready and be expected to be surprised with surprises.