Yesterday, two things happened that showed me why it is so important to always do the right thing. Both were related to closings and last minute changes to the HUD. The first was a deal I had negotiated several weeks ago where the Seller had agreed to pay $8,000 towards the Buyer’s closing cost. Of course, when negotiating, the other Realtor and LO, had assured me that the Lender would allow the Seller to contribute up to 6% and there would be no problem with an $8,000 contribution, since it was actually only about 4%. Well based on this information, the Seller agreed to the contribution.
Anyway, the Title Company received the closing package yesterday morning, for an afternoon closing, and faxed over the HUD for Lender approval. Well, a little bit later I received a phone call from the other Realtor informing us that the Lender would only allow a 3% contribution and would the Seller be able to bring a bank check to closing for the Buyer in the amount of $1,300 to make up the difference. Well my answer was “no”. Of course the Realtor proceeded to tell me that this was the only way it could be done and that the Lender said it was OK, it just could not be on the HUD. Now folks, I know we have beat this to death, but you can’t do this, so I told the Realtor again we are not doing it. I said, “If the Lender does not have a problem with it then put it on the HUD“. Well, as expected, they couldn’t do that. We stood firm and the Buyer closed anyway. The Buyer got his house, the Seller received a little extra money, the other Realtor learned something and no fraud was committed. In fact when this was explained to the Buyer they had no problem with it and were happy to close in a legal way. All ended well.
My other closing went down the same way. Almost an identical situation. The only difference was I had actually thrown in $1,400 of my commission, during the negotiations, to make the deal work for my Seller. I don’t normally do this but I had only had the listing for 10 days and wanted to get it pending. Since I am the Broker, I have a little room for negotiations. Anyway, the suggested “cash back” on this one was $1,800. We stood firm again. The Buyer agreed to close and since the Seller was getting the overage I took my $1,400 commission contribution back. Sweet! The deal closed, everyone is happy, no fraud was committed and I got my money back. Doesn’t get any better than that.
So folks, I guess this purpose of this post is to show you that if you just say no to fraud, things will work out. Educate the Sellers, Buyers and Realtors of why these things can’t be done and then stand firm. In most cases they have no desire to commit fraud, they just don’t know any better. Just because everyone else is doing it, does not make it right. Educate, educate, educate. Don’t let your customers and peers fall prey to these tactics. Whether it’s $500 or $500,000 it’s still fraud.
I slept like a baby last night and the Fed-Ex guy brought me an additional $1,400 today. The beauty of honesty. By the way, next time someone says it's OK because everybody does it, just say, "Broker Bryant doesn't"