“Condo Sale” – Class Discussion Question
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Condo Sale Gone Bad
Background: For a FHA loan there are requirements that a property must meet in order for it to qualify for that type of loan.  For example, the condition of the property must not threaten the health or safety of its occupants (plumbing leaks, poor workmanship, mold, etc.).  Unfortunately, there are a lot of agents that do not understand this, leading to cancelled sales, unnecessary costs, delays, and lawsuits.
Fact Pattern: A condo owner lists their condominium for sale with a real estate agent. For the purposes of our discussion, the condo does not qualify and may not be purchased with a FHA loan (for our discussion purposes it does not matter why the condo does not qualify). The agent does not realize that the condo cannot be approved for a FHA loan, and does not look into the matter.  The agent then solicits an offer with a FHA loan.  The agent presents this offer along with two other conventional loan offers to the owner.  The owner accepts the offer with the FHA loan.  By the time the parties discover that the property will not qualify for a FHA loan, the others that have presented offers have already moved on to purchase different homes. Now the condo sits without an offer.
Questions:
If you owned the condo, how would you feel about this situation?
What if, right after this, your real estate agent finds a new buyer that makes an all cash offer for 10% more than the old offer?  Would you still have concerns about the real estate agent if, in the end, it looks like you will make more money?
Remember, a real estate salesperson works under a real estate broker. If you were that salesperson’s broker, would you be upset with the salesperson?  Why? Who else should the broker be upset with?
How could this entire situation have been avoided?
Receiving Credit:
Once you have given your response, everyone needs to reply to at least two of your classmates.  To receive credit for this discussion, you need to post your responses below by the due date.