In God We Trust*. Every one else gets a background check

Working in the real estate profession is not for the faint of heart, especially in this economy.  Unfortunately, I missed the halcyon days of bidding wars in which properties actually sold or rented for more than the asking price.  I also missed out on the era in which seemingly anyone with a pulse could qualify for a mortgage. Even though the banks and the mortgagee really knew that the applicant couldn't sustain the cost of owning a home, that didn’t seem to matter.  Unfortunately, after the initial rush of owing real estate passes the reality of monthly mortgage payments, taxes, utilities and property maintenance expenses settles in. That's how "short sale" became a familiar part of our lexicon.

Especially in this buyer’s market it's tough to walk away from doing a deal. But whether a Realtor is representing a seller/landlord, a buyer/tenant, or is openly and legitimately representing both as a dual agent, the importance of qualifying all prospects has become more critical than ever. 

Often times it is difficult to ask what may appear to be prying questions about an individual's credit-worthiness.  In fact, if the real estate agent is representing a seller/landlord his or her client might actually resent or object to the agent's initiative to dig deeper before entering into a contract to buy or lease. But someone has to be the "grown-up" and ask the tough questions.  So be grateful if your agent is the one who assumes this responsibility.

What this means is gathering as much information as possible from the prospective buyer or tenant. This may seem to be intrusive but it is a business deal, not a love-in or group hug that we're talking about. (These signs of emotion and gratitude can be saved for the closing or when the rent is paid on time and on a consistent basis!)  If, in fact, the prospect does not have the financial wherewithal to be either buy or rent a particular piece of property, why waste your time? And yet, we all do.  We want to do the deal!

But I also want a red sports car (been there, done that) and a motorcycle (I might still get one) and lots of other things out of life, but I show SOME constraint.

And if the deal looks too good to be true, well, you know the old adage. Case in point:  After completing one of the most difficult lease negotiations in my glorious career as a real estate professional, a new opportunity presented itself.  As the agent who represented the tenant said, "this was too easy."  Unfortunately, he was right. A few months later, keys to the tenant's office were returned to the landlord via FedEx, along with a note saying that she had closed her office, was filing bankruptcy, and being sued by the government.  She had moved out in the middle of the night, even unbolting from the walls and floors an extensive amount of equipment needed for her professional practice!

I then Googled the individual -- a practice I will now do on any prospective tenant or buyer -- and learned that this was not the first time this individual had pulled this stunt.  In fact, it was at least the third time she had done it! Ironically, my client the landlord had just delivered a commission check to me days beforehand.  The right thing to do -- even though the commission was earned -- was to return the check.  We did so without objection but it hurt.

A week or so passed and I get a call from a prospective buyer of a mansion that will soon be auctioned off with a minimum opening bid of nearly $2 million.  The caller on the other end of the line claimed she would be paying all cash.  I jumped through hoops to get more information about the property for her. The agent representing the seller even agreed to make a special, early morning trip from Long Island to meet us at the property in Northern Westchester in order to accommodate the "buyer's" schedule. In my mind, I was already spending my commission check! 

In reality, the all-cash buyer is probably a deadbeat or game-player.  After an hours' worth of phone calls back and forth to set up this special appointment, she sent me a text to cancel. No phone call. No detailed explanation.  Just a, "sorry, can't make it."  It made me feel like an idiot and possibly look like one, too, to the listing agent.

I will give this "all-cash buyer" the benefit of the doubt.  Maybe something really did come up that she couldn't avoid.  Maybe she will call me back and I will be pleasantly surprised.

So what's the moral of the story? Financially qualifying a buyer or tenant is SOP, especially in this economy. Conducting a background check before going too far down the road? Unfortunately, that's also becoming more critical.  If there are any objections, isn't that a red flag? And if the seller/landlord is resistant to conducting this level of scrutiny, remember, someone has to be the adult and make the tough decisions.

*In God We Trust – Remember, He or She is the ultimate landlord; we’re all just temporary tenants.

Contact Rob Seitz at rseitz@stetsonrealestate.com or 914-393-6144.