Perseverance Overcomes the Nightmare Transaction

We've all had nightmare transactions.

Every agent has had to wrestle with problems to help shepherd a home sale to completion. What makes this one stand out is the variety of problems, the duration of the battle, and the tenacity of my clients. They are the ones with the grit necessary to withstand the buffering from people and events outside their control. The listing agent was also a heroic partner in this transaction. I haven't counted, but I think we went through half a dozen extensions, a cancellation of the escrow with subsequent new contract, and numerous battles with appraisers, lenders, and especially the sellers.

I have written about this transaction before. PNC Bank didn't want to lend to highly qualified buyers on a property the bank already owned. That was baffling in its own right, but coming after another lender's refusal to finance the transaction (with 20% down), we were almost ready to throw in the towel on the deal. Fortunately, Exchange Bank came through with the service and support you can only get from a strong, local lender. They understood the market, the location, and the home.

Nightmare Remedy #1. Get a local lender when you can.

One of the first inklings we might have a tougher than usual transaction came with the original appraisal. The out-of-area appraiser was undeniably thorough. His report was voluminous and detailed. Too detailed. He had gone out of his way to find minor problems that were easily addressable by the buyers. Electrical repairs that might take five minutes to repair were flagged as major problems. Building permit issues easily handled at our friendly Sonoma County PRMD were called out for repair in a situation in which the REO sellers wanted to make no new investments and the buyers weren't in an ownership position to deal with the issues. The appraiser basically killed the first lender's interest in the deal. Thanks for that.

Nightmare Remedy #2. Insist on an experienced, local appraiser.

We spent weeks trying to work around PNC Bank's inexperience in California. One issue that still rankles is their insistence on a private road agreement for a century-old road that has managed to survive all that time without any formal agreements When the road needs work, the neighbors get together and fix it. California Civil Code is very clear on this and so are the federal guidelines:

"If the property is located within a state that has statutory provisions that define the responsibilities of property owners for the maintenance and repair of a private street, no separate agreement or covenant is required."

Sigh...The misreading of the clear language of this clause was sufficient reason for PNC to decline to loan. This in spite of the fact that they had local California offices with California agents who should understand this stuff. It's not rocket science. It's just contract language. Thanks for that.

Nightmare Remedy #3 - Same as #1. Get a lender with local experience

One of our final hurdles was a water quality issue. The well on this property has been in place for a long time and was relatively inaccessible. The original water inspection team hadn't wanted to trouble themselves to do certain parts of the testing, so we got a report, but it wasn't comprehensive. In the final push to close, it was necessary for us to do some testing ourselves (and with the lender) that should have been done by the initial inspecting crew. This wasn't as critical as some of the financing and appraisal issues, but we should have insisted that a complete test and report be done initially rather than allowing a partial test.