Soon after my last meeting with the tenants, in mid-December 2012, the tenants became proactive. In the article Selling the Estate Rental Property: Determining Property Value, I visited the tenants to look over the property and to tell them that they will have first crack at buying the house, if they wanted to buy the house.  Apparently, the tenants became proactive and pursued financing soon after the meeting.

The Tenants Became Proactive

At first, I had no idea the tenants were applying for a mortgage. After the last meeting with the tenants, I put the sale of the rental property aside until after the holidays. So, after the holidays, in early January 2013, I became curious about where the tenants stood on the house and called them. The husband answered the phone and I asked with curiosity, “Did you decide on what you want to do with the house?”

The husband replied, “Yeah, we decided to buy the house. We have tried to secure a mortgage since you last visited back in December.”

Feeling elated, I asked, “How is it going?”

The husband responded, “Not good. We’re getting rejected because we lack a solid credit history.”

Unfortunately, having worked in consumer lending, I knew they wouldn’t get a mortgage.

The Tenants Keep Trying

Since the tenants lacked a good credit history, all that would happen is endless advice on how to establish a good credit history, which was no help in this situation. So, with some concern, I asked the husband, “Where are you now in your search for a mortgage?”

The husband replied, “Well, the realtor recommended a couple of loan officers and I plan to meet with them this week.”

Immediately, I replied, “Great. Remember, ask these loan officers at what amount would they grant you approval. The $240,000.00 is negotiable. It’s not final.”

The husband replied, sounding indifferent, “Sure, I will give that a shot.”

With that lackluster response, I ended the conversation feeling that we both knew getting a mortgage wasn’t going to happen.

The Tenants Fall Short in Their Efforts

A few days later, my feeling was confirmed. The husband called to tell me that both loan officers denied him a mortgage because he lacked a solid credit history and that the officers dispensed more advice. However, the husband did take the bad news in stride realizing that using cash only has its consequences. So, I assured the husband that nothing more will happen until the realtor can find another home to their liking. After the conversation ended, I hung up the phone and immediately called the realtor. The realtor already knew about the tenants and was in the midst of searching for a new home.

The Tenants Still Have Hope

In the end, the tenant’s failure to buy the house was a bittersweet moment. The tenants became proactive because they loved the house and wanted to buy the house as a last resort. When the attempt to get financing failed, I had empathy for the tenants. In the span of one month the tenants were living their lives and then suddenly, they have to pack up and move. Further, the tenants admitted to the mistakes that cost them the house and graciously cooperated, up to this point, in the process. However, the tenants would most likely end up in a better home. Therefore, I still had hope that everything would work out for the tenants at the end of the process.

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