This is a story of two closing agents, one named Goldie and one named Bronze. Both have conducted hundreds of closings. Real Estate Agents flock to Goldie because “her closings are so smooth”, and “she always has the answers”. These are their responses to questions asked of them:
Question 1- At closing, the Buyer asks, “What if I’m late on my mortgage payments. Will I be foreclosed?”
Goldie says, “Not to worry. There’s a late fee provision, and you may have to pay that, but no one forecloses because of late payments.” The Buyer is comforted and signs the note.
Bronze says, “You know, I guess it depends on how late you are, and how frequently. But the best answer may come from your lawyer. Do you want to call him?” The Buyer knew the answer was probably that, doesn’t call anyone, and signs.
Question 2- Two weeks prior to closing, the Buyer asks, “Shouldn’t we have a new survey?”
Goldie, using her years of experience, says with authority, “We normally don’t see surveys with assumption closings. They’re expensive and take about two weeks. Most people close without them.”
Bronze says- “We often close without new surveys where the old one is only a year or so old. I will not discourage you from getting a new survey, but I will tell you it may take a week or more to get one. Whether or not to have a new survey is a decision you must make. Do you want to call a surveyor or discuss the subject with your lawyer?”
Here’s the tragedy. These questions and answers are given everyday. The irony is that Goldie will stay so busy with referrals from not-so-careful realtors that she won’t have time for lunch. Bronze may be relegated to the relief staff because no one refers her business.
But run the clock forward. Buyer 1 has failed to make his mortgage payment timely for the umpteenth time, this time with a notice from the mortgage company that no late payment would be accepted. Buyer gets sued in foreclosure and he defends, saying the closing agent represented the mortgage company, and Goldie told him at closing that foreclosure wouldn’t happen if payments were late.
The outcome is time-consuming and expensive for the mortgage company and buyer. Goldie is at least a witness, if not a defendant.
Question 2 is even more tragic. Weeks after closing, Buyer learns that the pool deck is constructed over the subdivision sewer easement, and the County’s in the backyard to dig up the sewer line.
Buyer sues the Seller for failing to reveal that the pool deck was constructed over a sewer line; Goldie for her smooth, confident advice; and both Realtors, saying they chose Goldie, and she’s their agent. Buyers therefore claim their Realtor assisted in fraud.
The result? Buyers learn a lesson for next time. Goldie probably goes on giving answers to what amounts to legal questions, although for some reason she seems to be spending more and more time in court (sometimes with Realtors who admire the authoritative way she handles the parties and their questions, as co-defendants).
Bronze, meanwhile, doesn’t understand why her business is slowly growing with referrals from careful Realtors and Buyers even though she never seems to have all the answers and her closings sometimes take a little longer.
The intent of this story is to point out that some people find advice very easy to give when they expect no consequence to themselves from that advice. While almost no question is too silly to be asked at closing, a whole lot of answers given at closing are too silly to give, and may cause serious consequences for both closing agent and Realtor.
