Check out this frantic voicemail I received last Wednesday night (the 30th of October) from a young, inexperienced, part-time mortgage broker:
Good evening, Mike Santos, how are you? My name is ******, I am the mortgage broker….getting the mortgage for one of your clients. And, uh, we are reviewing the documents and, uh, the lender actually caught it…the Purchase and Sale agreement is actually expired. It says the deal will be revoked on the 27th of October. So, I’m not sure if you already have an amendment for that, but this is something we need to discuss as soon as possible to be able to process, uh, the application. Feel free to call me back at ***-***-****. Thank you.
For people not in the real estate industry, this probably sounds like a really big problem. In reality though it’s probably one of the more ridiculously incompetent things I’ve ever seen as a real estate agent. In fact, it’s clear that our mortgage broker here has never seen an Agreement of Purchase and Sale and whoever is acting on behalf of the lender (the detail-oriented Sherlock) never has either.
What they’re referring to is Page 1 of the Agreement of Purchase & Sale (APS, for short) and specifically the pre-printed, standard clause surrounding the term irrevocability. Let’s take a quick glance at what the clause says:
This is a really important clause. In fact, it’s the first clause because it’s so important. Irrevocability is a very simple concept. What it means is that the Buyer in this case is making their offer to the Seller and it will be available for them to accept until 11:59pm on the 27th of October. If it’s not accepted (or a counter offer isn’t made by the Seller) then the offer is expired.
Now, here’s the important part that will make you understand why I’m even writing this post.
The deal was accepted that day! There is a signed Confirmation of Acceptance on a separate page where both Buyer and Seller have acknowledged that a deal is now in place. That’s why the mortgage broker is reviewing the deal! An APS would not be sent to them to review if it wasn’t accepted!
He was given five business days to review the agreement and approve my Buyer’s financing. He then sent me this voicemail on Day 2 (the 30th) of that conditional period. He and whoever was doing the work for the lender thought that the deal had somehow expired.
Anyone with even the slightest bit of formality with an APS would know that the APS has been already been accepted. Even worse is that both he and the person acting for the lender clearly have no idea how to read an APS or understand the very basic rules surrounding the most important piece of paperwork for the purchase of a home.
How to Avoid a Horror Story
I called our mortgage broker up and explained why he didn’t need to be panicked. He apologized and promised that everything would be sorted out. I then called my client and, as professionally as possible, asked where she had found her mortgage broker. She explained that he was a really close friend of hers. That wasn’t surprising at all considering the company he worked for, the utter shambles his LinkedIn profile was in, and my experience dealing with him so far. I decided I would give him a chance but that I’d have to watch him like a hawk between now and closing.
Choosing Your Mortgage Broker or Real Estate Agent When Buying
For the love of all that is holy please take my advice – do more research before choosing professionals for real estate who will help you purchase your biggest asset. You may have a friend in the business, but that doesn’t mean they are capable of doing the job for you. On the other hand, they may be perfect to work with. They may have lots of experience and you can trust them because they’re close to you. But, before you decide to work with them find out more about their experience, if they do real estate or mortgages full-time and really assess the kind of person they are at work. Do they jump from job to job? Are they reliable people in your social life? These are both good insights into what kind of professional they will be and how they will handle your transaction.
This is likely the biggest purchase you will ever make in your life and you need to have the right professionals in place who know what they’re doing. If they’re making such simple mistakes, imagine what else they could possibly miss along the way. Learn this important lesson now before you receive your own frantic voicemail.