Jan. 31, 2007 - Why I wrote the buyer a blank check

It was the day of signing.  I had already given the buyer $900.00 toward their closing costs on the small house they were purchasing at a very modest price.  I had already bought them a washer and dryer.  At the last minute there was a lien in the buyer's name and escrow couldn't close unless he paid it off.  He insisted he had already paid it, but there was no time to convince the lienholder to remove it before they signed the final papers.  Escrow couldn't proceed with the lien unpaid and the amount of the lien was somewhat undetermined.

A delay was just not in the picture.  The seller had already moved out, the buyers had already given notice on their apartment.  I turned to the closing agent and told her to take the amount from my commission.  She was flabbergasted.   We didn't know the exact amount of the lien, but we did know it was less than the commission.  The Escrow Company agreed to continue with the signing and closing on that basis.  The buyer and the escrow company worked very hard to have the lien removed.  So I didn't have to pay off the lien.

If the buyer was paying off the lien, I really don't think escrow would have worked as hard to get it removed.  They probably would have felt that was the buyer's problem and not theirs.  By offering to pay the lien myself, the escrow company worked differently.  They did feel like it was their job to get the lien removed and pay me the commission due. 

I will never forget the look on the buyer's face when I "wrote him a blank check" so that he could get his new home and move into it on time.  Even though I didn't have to pay it, he greatly appreciated the fact that I was willing to do it, and that by offering I managed to get him out of a very tight spot.

Feb. 26, 2007 - Why writing the buyer a blank check is a bad idea

Under the conditions that you will totally not have a closing if you do not fund the buyers problem with money, I guess you might want to throw your money at the buyer.  My expierence is that treating the buyer's problems like they are the buyer's problems, you still get to the closing, but without spending your earned commission money.  I just tell the buyers that we will simply find them another home without the problems.  Or that after they are able to resolve their issues, we will start again.  Every single time, the buyer finds another solution to their problems - on their own and I have made it to the closing without spending my money.

Another point is that I often find buyers that tell me while I am showing them homes how they resolved previous purchases by having both brokers and the seller throw money into to the pot to resolve their issue.  What we are doing is training buyers to expect the brokers to pay for their problems.  In my opinion, this is quite a mistake.

Feb. 26, 2007 - re: Why I wrote the buyer a blank check

Bill,

How could your opinion possibly be "this is quite a mistake"??  The people got the house and it cost me nothing in the end.  Obviously, that can't be a mistake.

We ask people to trust us every day.  What's wrong with trusting that if there were a legitimate item that needed to be paid for, the buyer would have reimbursed me after the fact.  Trust is a two way street.  I trust them, they trust me, we are accomplishing something together.

This was a very unique home that doesn't come up every day, finding another one was not a certainty, so THIS one had to be theirs...and it is.