this is "common" and "ok", is it?

**mr1** · 10-27-2009, 01:20 PM

New construction home at about 80% complete. Buyers like home and want to purchase but say they want to make changes to home. Builder agrees. A request is made for the builder to put the changes and itemized costs in writing. List is incorporated into a purchase contract. Buyer has accepted contract on the home. Later on, buyer decides to make more changes not mentioned in the change list. Buyer also has 6K credit for making changes to home.

At some point, buyer exceeds builder upgrade allowance. Listing agent never amends purchase price (largely because listing agent is clueless), buying agent does not know buyer has gone over the allowance. Two days before scheduled closing, buyer calls buying agent and complains about a "commission" to builder for extra work done. No where in the contract is mention of a commission or any financial obligation other than what's generally stated (commission to listing and selling brokers). Lender calls buyer's broker to say loan is complete. Buyer's broker calls listing agent to inquire about "additional costs" accrued by buyer. "Too late to change the purchase price" says the lender - the loan is complete and the rate lock expires the day after closing. Closing attorney says, "oh, it's OK, we'll just have the buyer pay the builder in cash as personal property on the HUD-1 so we can leave the purchase price the same." Buyers say they are totally ok with paying cash for going over their allowance.

Other details: purchase price of home is $262K. Has no problem appraising. Additional costs accrued by buyer is around $9K.

Does this sound "common and ok" to anyone else?

**Greg** · 10-28-2009, 08:35 AM

The lender says its ok, the buyer says its ok, the seller says its ok and the attorney says its ok.

I don't see what your problem is.

**mr1** · 10-28-2009, 09:10 AM

We have this little issue of "personal property"....this is new construction --> there is no personal property --> it's real property. This is a method to get out of redoing the loan package since the list price should have been amended but wasn't. So now we have roughly nine thousand dollars going to the builder as cash from buyer for *improvements* on the *real property* but instead, it's being classified as a "personal property transaction related to sale". So I guess my answer from you is - it sounds ok and is common practice. Ok.

It's almost funny that your qualifiers for "ok" are if the entire group says it's ok then it must be ok. I don't think there's a single person brought into a mortgage fraud suit who doesn't look at it the same way you do, Greg. Just sayin.

**Greg** · 10-29-2009, 06:42 AM

I am not there. You are. I don't know if there are appliances, you do.

If you think your clients, their lender and their attorney are colluding to commit mortgage fraud then notify the attorney, your clients and the lender that you will be notifying the authorities. Just sayin.

**mr1** · 10-29-2009, 07:14 AM

Originally Posted by Greg

I am not there. You are. I don't know if there are appliances, you do.

Then maybe it would help to ask instead of assume?

If you think your clients, their lender and their attorney are colluding to commit mortgage fraud then notify the attorney, your clients and the lender that you will be notifying the authorities. Just sayin.

I'm not there yet. Was wanting to see what other agents had to say...Just sayin.

Thanks for the appliance info though...after thinking about that a bit more, I can see where appliances would be thrown in to a seperate personal property category in an effort to get out of redoing the loan...there was no property disclosure (it's new construction) so there's nothing in writing that says whether the appliances come with the home or are "extra" (although it is customary that the dishwasher and range are included in new construction and resale homes in my area). Also, at 80% complete, of course there were no appliances in the home when the purchase contract was turned in - the appliances are installed last.

Yeah, sneaky...who's to say what budget the appliances were supposed to come out of when they were never seen nor was there any written reference to them...I'm starting to see where this is common...I'd be curious to hear an anonymous unbiased lender opinion.

**Curtis McLain** · 11-21-2009, 10:37 PM

Mr1 you seem like a piety detailed person.

1.If you ask my opinion the buyers agent drooped the ball for not working closer with there clients to make sure things were running properly.

2.the contractor drooped the ball for not making up proper change orders and provide them to the buyer and buyers agent. and not discussing it with his agent to make sure that his agent is protecting his interest

where would this deal have been if the buyers didn't have the cash and/or with the extra they would no longer qualify for the loan. With a contract singed they would have an enforceable agreement. Also since the buyers requested the work and the contractor preformed the work they have an implied contract for the extras.

Sounds like one hell of a legal situation if the buyer and contractor would not have been so agreeable.

i have been a general contractor for 14 years and in real estate for 4 of those years, common yes IMO because of ignorance. is it OK not in my book but once the ball has been drooped that bad you got to clean up the mess some kinda of way.

**mr1** · 11-22-2009, 07:33 AM

Originally Posted by Curtis McLain

Mr1 you seem like a piety detailed person.

1.If you ask my opinion the buyers agent drooped the ball for not working closer with there clients to make sure things were running properly.

The buyer's agent would be me. I'm not offended though. Seriously. I ask for an honest reasonable respectful opinion and I got one. Now my response. Oh my gosh, Curtis, you have no idea what it was like working with this buyer. I wish there was a word to describe the type person she is. She's one of those chics who dominates the relationship, hardly hear from the husband for fear of retaliation from the wife, she has incredibly low self esteem, she doesn't like anyone "telling her what to do" even if you are only doing what you're hired to do (to advise), she's the type to nit pick every little detail (some nit picking is good but there is a line of ridiculousness - she's a few miles past that point), fake, vindictive, and two faced (did I mention crazy?). I am "friends" with the husband and I had never met the new wife until the listing appointment.

I had asked many, many, times for her to not agree to anything unless we had it in writing and to never give them any money without running it by me first. Guess what she did within one week of asking her that? She gave the listing agent HOA dues (several hundred $$) so she could use the pool while the home was under construction. She told me about it as a "slip up" when she mentioned she was picking her son up from the pool. Uh, what pool?

After she "got away with that", just being the defiant person she is, she began doing other things I asked her not to do without consulting me - change requests. I told my buyers right off the bat to NOT do new construction (or under construction) since neither of them have that kind of spare time. Nope, out of the thousands of homes to choose from she picks one under construction. I told her that this builder was in his 70's, his sidekick was in his 70's and they're not "custom builders". They're not technology friendly and basically were cookie cutter home builders. I tried to explain what that means to her, but guess what? If she can't have it SHE WANTS IT. Typical American chic.

To make a long story longer, Curtis, there's very few people on this earth who would have survived that buyer. I'm still alive. I'm thankful for that.

2.the contractor drooped the ball for not making up proper change orders and provide them to the buyer and buyers agent. and not discussing it with his agent to make sure that his agent is protecting his interest

You are exactly right. I'm not making excuses for him, but he's not a custom builder. In my opinion, he should never have put the home in the MLS nor a for sale sign in the yard until it was complete. The builder didn't so much as have a floor plan for them to look at. I had to go to the site office, take pictures of the architectural drawings, and email them to the buyers. Then I had to take a picture of the house and photoshop it as a finished home because the builder didn't have a rendered drawing either. I should attach the picture I did in photoshop and the finished photo of the home. They're nearly identical. How many agents do that for their buyers? That was one of many things I do to go above and beyond for my clients.

The builder nor the buyer never told me a thing. The moment I found out I was out of the loop, I tried a more aggressive approach by calling the builder direct. No luck with that. He's not a communicator and she's sneaky and defiant. Sucked to be me.

where would this deal have been if the buyers didn't have the cash and/or with the extra they would no longer qualify for the loan. With a contract singed they would have an enforceable agreement. Also since the buyers requested the work and the contractor preformed the work they have an implied contract for the extras.

Again, you are correct. It would have been a dead deal or at least in court for the buyer's to pay the builder the difference for all of the change requests. But with her mindless "rainbows and buttlerflies" thinking, she throws caution out the window. She's a single mom who just married a man with a multimillion dollar net worth. She doesn't have to listen to anyone.

Sounds like one hell of a legal situation if the buyer and contractor would not have been so agreeable.

That's what I kept saying. But what makes it worse is that since I was able to clean up the mess (calling the listing agent to get paperwork for the HOA funds, letting the closing attorney know to credit the buyer's column, etc. etc.) she thinks that behavior of hers was acceptable and she'd turn right around and do it again. Since I was there to clean up the mess, she didn't have any real consequences, so why wouldn't she do it again? Reminds me of my idiot ex wife. I despise defiant, disrespectful, disobedient, wives who are reckless with their husband's money.

i have been a general contractor for 14 years and in real estate for 4 of those years, common yes IMO because of ignorance. is it OK not in my book but once the ball has been drooped that bad you got to clean up the mess some kinda of way.

I don't claim even part of that ignorance. I closed the deal, everyone *seemed* happy, although I am absolutely certain she'll blame me for the "rough ride." Chics like that don't take responsibility for their bad behavior. If I messed up, I'd quickly say so.