Letting A Buyer Client in St. Louis Go

In St. Louis, it’s hard enough to get real estate buyers and sellers to work with you.  Imagine how difficult it is when you have to move on from a buyer client!  This is the situation I found myself in last week and I wanted to try to explain my decision for the benefit of other real estate agents who might also be struggling with the same question.

We’ll use a pseudonym for our story.  I’ve chosen “Tracy”.  I don’t want to hurt anyone or anything like that, and confidentiality is very important to me.  Anyway, our story begins with a first phone call that was not exactly ideal.

“Hi, Are You John?”

Me:  “Yes”

“My real estate agent sucks.  I tried to buy a property;  it was worth more than 100,000, but I offered the seller 50k and he agreed.  Then when we had inspections, he said he wouldn’t sell it to me so we had to go to court and I won but my real estate agent said we couldn’t work together anymore.  I want to buy this house in x school district, will you help me?  I’m pre-approved through x lender.  I’m looking to buy a house with some equity.  I don’t mind fixing up a home while I live in it.”

I was intrigued.  Why did this end up in a lawsuit?  Why did the seller agree to sell a property for so little compared to what it was worth?  There weren’t good answers.  I asked for the name of her lender, and I called him right away.  Unfortunately, it was past normal banking hours so I didn’t get a chance to hear from him that evening.

Tracy asked if I would show her two houses.  I told her I would show them but that we weren’t yet in a position to put in an offer because I hadn’t heard from the lender so I have no idea what our offer would consist of.

We met the next morning at one of the houses.  They were asking 90,000 on a foreclosure.  The house was not in a condition where it could be lived in.  The back yard was wet from the septic system that wasn’t working right.  The basement had large holes in the walls to the outside.  There were no appliances, and the water lines were completely gone so if you turned on the water in the house, it would spray everywhere.  One bedroom had no venting for heating and cooling.  There was another small bedroom, and Tracy was going to have 6 people and a large dog live in the house.  It was clear to me that this house wasn’t going to work.

We left that house and went to the next one.  That house had potential.  A full garage, 3 real bedrooms, and the septic system had been replaced.  It was still a foreclosure, asking about 120,000.  That house did make sense for Tracy.

We left the properties and I went to get some lunch.  While eating, the lender called me.  He asked how I got involved with Tracy, and I told him that a friend had referred her to me.  I asked about the pre-approval letter and he said that it was for $60,000 some months ago, but it had expired and it was before she bought a car.  He also mentioned that I was Realtor #5 for Tracy.  He explained that something always went wrong with Tracy, and she never took responsibility for anything that happened.  She also had this odd habit of racing to go buy a house, and then disappearing for weeks.

While we were at the house with Tracy, she told me that she didn’t have a pre-approval letter, and I told her that we couldn’t put in an offer without one.  She told me on the phone that she had one, so the story changed in a day.  The new story was that she was waiting for her sister, who lived in a basement, to clear up her credit, so she could co-sign on Tracy’s loan.

My experience tells me that when someone wants to buy a house, they don’t lie about “little” details like pre-approval letters.  Also, it’s never a good sign when you are waiting on your sister to help you co-sign on a loan application but neglect to mention this on first meeting.  Tracy asked what we needed to do to put in an offer on the second house, and I told her that we really can’t move forward without a preapproval letter.

Two weeks later, I get a phone call.  It’s Tracy.  She tells me that her sister is ready to apply and that they should get the loan pre-approval by 5 p.m. and that she wants to make an offer on the first property visited.  The good house actually went under contract a few days after we looked at it.  She says that she is going to get a home equity loan when she buys the house and then use that money for repairs and then the house will be worth 150,000.  I said that we would have to look at the house again the next day, if we got the pre-approval letter.

That night, sure enough, the pre-approval letter came in again at $60,000.  They were asking $90,000 for the house and it was not even close to being in move in condition.  I told Tracy that we weren’t going to be able to work together.  Here are the reasons why.

1. I was supremely uncomfortable with the math on this deal. She wasn’t going to be able to refinance.  She wasn’t close to being able to bring the $1,000 cashier’s check that had to accompany the offer.  Also, let’s assume she actually got the house.  She couldn’t move her family there, because she wasn’t going to be able to get an occupancy permit.   She was going to have to make payments on the house and on her rental, and she was pretty much broke to begin with.  I have to be able to sleep at night.  My job involves helping people, not hurting them.  Certainly, for her to continue with this sale would be a travesty.

2. She didn’t listen to my counsel. I have experience as a real estate agent.  When you utilize my services, you are using my counsel.  The reason this is important is I make recommendations for you to follow so that you can actually buy or sell your house.  In the case of buying, I can save you money because you will not be buying a house that is horrid.  When you are selling a house; the decisions we make, how we stage and how we market the home matter.  I can get you more money and sell the house faster if you listen to what I’ve learned.  Why use an agent at all if you don’t use what they have to say?  It makes no sense.

3. She couldn’t ever keep her story straight. If you lie all the time, how am I supposed to give you the right information?  As an example, if you tell me that you HAVE to have this certain house; we will make an offer that is likely to get the house.  But, what if you tell me you HAVE to have a certain house but don’t really mean it?  Our offer is going to be too high and you are going to end up regretting making the offer you made when you end up getting the home.  There’s also an issue of respect.  When you tell me that you are pre-approved for a mortgage at a certain number and I take your word for it and show you homes in that category, I am doing this when I could be doing something else.  You are taking time that I can never get back, and you’re doing it KNOWING that you can’t afford the house?  Very disrespectful to me and any other clients I could have been working with during this time.

You might be reading this and thinking, “John, just take the money.”  Unfortunately, I can’t work that way.  You are paying me for a service rendered based on my experience in the St. Louis area residential housing market.  Any idiot can write an offer to purchase a home.  That takes no skill or expertise.

Another objection might be that we were dealing with someone who didn’t have a bunch of money and that we would have worked with her if she were looking for a half a million dollar home.  I can tell you that if Tracy were at this level, we still would have had to end our agent-client relationship.  We simply can’t operate on the basis of lies, not listening to counsel, and making poor financial decisions that have serious implications to your overall quality of life.

Deerwood Realty was founded with our clients’ best interests in mind.  For too many years, I watched agents look at clients as piggy banks to be smashed.  The clients were only vehicles to agents getting paid, regardless of whether or not the buyers or sellers got any real benefit out of the service.  That’s not the way I do business, and that isn’t the way we are going to do it with this real estate brokerage.   So far, we’ve had a lot of success; our referral rates are very high, and we have a solid reputation.  At the end of the day, we can’t afford to work with people like her because our good clients expect and deserve our attention.   If this business philosophy appeals to you, I urge you to give us a call and let us show you how much better listing your home or buying the home of your dreams can be.