Domino Theory

In the real estate business we occasionally run across a situation where a seller needs to sell their house and get the profits from it before they can buy a new house. In a perfect world a Realtor can set it up so that the seller can close on their current house and purchase their new house in back to back closings. I have done this several times and have learned from my experiences. It is best if you use one title company to do both closings. This way you are not running across town to get from closing 1 to closing 2 title companies. Also when money from the first closing has to get to the second closing title company, the money must be wired which could take hours. The logistics are critical to get the job done.

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I recently had a transaction where 3 or 4 houses were involved. Each owner had to get the money from their current house in order to purchase their new house. Hence the domino theory. My listing was the first house to close and everything depended on it to start the dominoes falling.

My listing was a very nice ranch in Pike Township. The sellers had taken excellent care of it and it had great amenities. The sellers were some of the nicest clients I have ever had. The house had a good offer on it in 55 days. We negotiated a closing date a couple months out so that my sellers could find another house to buy although we had already been looking. We found a new house and made an offer. After negotiations were done which included having back to back closings at the same title company we had two dominoes in a row. The sellers of the house that my buyers were purchasing were in the same situation. They needed the profit from their house to buy the next one. They found a new house and were set to close on it the same day but not at the same title company. I am told that there was one house(domino) after that but did not verify.

Everything was set. We all were ready to close July 10th. My sellers had already moved everything out of their house and it was being held by a moving company. They were living in a essentially bare house with 2 very small children which was very challenging. Their plan on closing day was to pick up what was left and put it in their car, do the 2 closings at the title company and meet the movers at their new house to unload their furniture. It just so happened that the owners of the house they were buying had the same idea and did the same thing.

On the evening of July 9th I got a call from the buyers agent who had the buyer for my listing. She had bad news. The lender had checked the buyers credit that day and found out that the buyer had made a late payment. The closings were off. The dominoes were not going to fall in the morning. I was told that it could be a week to 10 days before the lender would allow a closing. They had to verify that the buyer did not owe any money where they made the late payment and get a credit re-score. I notified my seller. They were willing to wait. The sellers of the new home they were buying were also willing to wait.

After massive communications with my sellers, the buyers agent, the listing agent of the house my buyers were going to buy and the lender of the first buyer, we all ended up in a holding pattern. Days turned into weeks and weeks into a month. Patience was drawing thin and at any minute somebody might pull the plug and the dominoes would not fall. My sellers costs were adding up. They had to pay their lender a fee to extend the lock on their mortgage rate. They also had to pay the moving company to store their furniture. The lender was not communicating what was going on which left everyone very skeptical. There were two times during the month that the lender ok’ed the close and then canceled the day before. My seller and I communicated regularly. My main question to them was how badly did they want this new house. There answer was “very badly”. They were willing to wait.

Another challenge came into play. My sellers daughter was starting school. The new school district would not allow her to attend unless the family was living in the school district or they could tell the school when the closing date was. After 4 weeks we had no answers. It meant that the daughter might have to attend the school in their present school district for a couple of days and then transfer to the new district once they closed on the new house. Not a good situation for a child just starting school.

After the 5th week we finally got a verified closing date. It was going to be the day before school started in the new school district. At that point I questioned it. Was it really going to happen?

On August 14th the dominoes started to fall. The lender showed up at the first closing. He acted like nothing out of the ordinary had happen. He even talked about the last two days before closing that he had spent on the golf course. My seller heard that and told me after the closing that he almost threw something at the lender. The lender also gave me a folder filled with information about their company and a stress ball. It was to late for a stress ball. What I wanted was a quart of whiskey. The amount of stress this lender had put everyone through was just unreal. This lender will remain nameless but it is a lender that I have never referred business to and never will.

I am a very patient person. Probably to patient at times for my clients. I did not lose my patience on this transaction but I did write a letter to the lenders branch manager and regional manager. I don’t think it did any good but you never know.

No two transactions are the same in a Realtors life. In my 13 years as a Realtor I can’t remember a transaction that affected so many lives at one time and caused so much misery. Hopefully it will never happen again.

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