What's a Girl To Do? Part I

"What's a girl to do?" asks my colleague.  That's how all ethical questions start, but this question was fraught with frustration.  My respected colleague who dots every "i" and crosses every "t" (and who had recently been dubbed as one of many unprofessionals by Chris Galler because she didn't meet his guidelines for number of annual transactions required to make one a professional) was seriously asking this question.  She was totally frustrated. 

She represented the buyers on the purchase of a St. Paul home.  At the closing table the listing agent produced the earnest money check written by her buyers 6 weeks earlier and pushed it across the table saying, "Take care of this."  What's the big deal her buyers and most consumers might ask.  Just take the check and give it to the sellers as part of the purchase price for their home.  Sorry, but it's not that easy.

Page one of the Minnesota Association of REALTORS® purchase agreement states "earnest money to be deposited upon acceptance of Purchase Agreement by all parties, on or before the third business day after acceptance, in the trust account of the listing broker . . ."   This is based on law, not common practice.  The listing agent had not only violated the law, but had also broken the terms of the purchase agreement thereby nullifying the purchase (However, according to Chris Galler, this agent was a professional because he was a top producer in a big company.  An opinion still based only on numbers, not level of competence!).

As the check crossed the table, and my colleague realized what it was, alarm bells clanged in her head!  Her eyes widened!  Panic set in.  This transaction might not close today because the listing agent hadn't done what he was required to do.  The mortgage company had verified funds to close based on the assumption that check was cashed.  That meant the buyers could be seen as that much money short of the required reserves they needed in their account.  The whole file might have to be rewritten and submitted to underwriting for a new approval!  "Ohhhhhh, nooooo!" screamed sirens in her head.

A call to the lender yielded a temporary fix.  Changes were made to the purchase agreement and both buyers and sellers initialed.  A new closing settlement statement was generated.  The loan officer said this was the solution, but had the underwriters been consulted?  Although the problem appeared solved, the St. Paul real estate agent was left at the table wondering, "What's a girl to do?"

More thoughts on this scenario will appear in Sunday's post.

Comments

[Bonnie Erickson]

Jack, We haven't met yet, but I already like you! Tripe is the perfect word to describe Chris' opinion in this case. Yes, the real estate industry as a whole will experience attrition all on its own. It doesn't take the discouraging words of the MAR senior VP to encourage those who can't make a go of it, to leave. I hope along with you that mostly true professionals will be the ones left!

[Jack Boardman]

Bonnie: In my opinion, Chris Galler is NOT doing the RE profession a service by writing such tripe. The profession will shake itself out eventually, and one would hope, the truly professional agents will remain (perhaps I'm delusional there - but one may hope).
Jack