Some background first. I was going to do a "For Sale by Owner" of my house, but decided I was too stressed after moving to the new house and cleaning the old house. I would have been better off waiting a few weeks to de-stress. Hiring an agent was a mistake.
The house was listed through the agent at a very high price which I said was too high. Many people looked, but balked at the price. A young unmarried couple with five small kids between them wanted to buy the house for $25K less than the listing price. They have no money, but were trying to get a USDA loan. Their agent came up with a plan where they would rent my house for a month while trying to get the loan. There would be no renters deposit and they could only pay me half of a ridiculously low amount for rent the agent decided by herself. The other half would be paid at the end of the first month. My agent (supposedly working for me) told me to accept this, pay all of their closing costs, pay all of the home warranty, and the inspections costs. The house went off the market. I said no way. My agent got mad at me. The young couple, after I said I would not rent to them, said they would not buy from me. I said that was fine. The house went back on the market for 10 days.
The same young couple came back with a different agent and said they would buy and would not rent. I said I did not want anything to do with them. My agent told me that we had to go with them because it was a legitimate offer. We got them to come up $7500, but I was to still pay their closing and other costs. This was July 8.
Inspections were done on the 90-year-old house. The home inspector found nit-picky things like GFI outlets not being in the kitchen and 14 different things like that. He called them "defects" and I argued they were "upgrades". All work had to be done by licensed professionals at my cost.
Closing was to be September 19 which is a long time waiting from July 8. My agent kept assuring me it was a done deal and the house was off the market all this time. Then on September 15 I get a call from my agent saying they did not get the loan because the woman had falsified some information on the loan application about income and also something about not paying some past bills. The deal was off.
I am arguing that I am entitled to the earnest money. Both agents say that I am not because the buyers did not back out, they just did not get their loan. I could hire an attorney, but that would probably cost me as much as I'd get if I got the earnest money. Any suggestions?
1) Read your listing contract carefully. If at all possible, and at the first legal opportunity, fire your current "agent".
2) Get a knowledgeable and professional real estate agent, and if necessary, involve a knowledgeable and professional attorney.
3) If at all possible, specify that only "pre-approved, financially qualified" offers will be considered.
I feel your pain.
i know that you want to sell fast, get your $, and get on w/ life. been there and got the t-shirt. my suggestions are
1. take the realtors advice and forget the escrow, i assume that they would know the law regarding that
2. regard the repairs/upgrades as something you probably would have had to have done anyway and now it's done and paid for. assuming that you had a reinspection that passed and is paid for, then use that same inspection on the final sale
3. to the best of my knowledge, all of the closing costs are negotiable. pay for the ones that you can use again if a deal falls through and let the buyer pay for the rest. examples of reusables..inspections, surveys, etc.
4. only deal w/ buyers that have already been approved, qualified, etc. forget the folks that have some kind of sad song and want you to help them out. you ain't a charity, you want to sell a house
4. get a new realtor that will work w/ you regarding pricing and the strategies to get the price that you can live w/ quickly
good luck and keep a tight line
It's been a while since I sold a house, but it sounds like things haven't changed.
I was amazed at the number of "lookers" that wanted me to remodel so they would like it enough to buy it. Kinda like "we'll buy it if you knock 15k off the price and put in a new kitchen"...
And the agent was all about spending MY money. I finally told them all to go to hell. The listing expired and I sold it myself...and got what it was worth to me. It was relatively painless. I was out the money to an abstract company to bring the paper up to date and issue a title insurance policy, but that was chump-change compared to the commissions.
It's a racket and you've got a room full folks that make a living off your sale. They want you to pay them for screwing you...it does not make sense to me.
Realtor???
Grab the Real Estate Agent by the throat, and choke her/she/it, until they turn blue. When they reach a dark hue of blue, you will be able to re negotiate with he she it.
That was an academic question and answer.
Next?
🙂
N
Realtor???
Natester you made my day, LMAO with tears! 🙂
"The same young couple came back with a different agent and said they would buy and would not rent. I said I did not want anything to do with them. My agent told me that we had to go with them because it was a legitimate offer."
Perhaps, but you can counteroffer. If you preferred not to conduct business with the prospective buyers counteroffer $100k higher. The Realtor MUST present the counteroffer to them. Either way you rid yourself of pests or realize a financial gain.
B-)
Sorry to echo the above, but fire that realtor at the first possible opportunity - most listing contracts are for a certain time period. Decisions like how much to list for and sell for are YOURS to make, not theirs. A knowledgeable realtor will advise you on pricing based on the recent comparable sales in your area. A good realtor also knows that a property that is priced $25K too high will never sell, because realtors representing purchasers pull prospects out of the MLS database based on what the purchasers want to spend or are pre-qualified for. In this area, anyhow, sellers price correctly and there is very little negotiation.
Agree that some of the "improvements" were probably going to need to be made to a 90 year old house regardless.
Also echoing the above - don't even consider working with a buyer who isn't already working with a lender. If the buyer's agent has a clue they'll hook them up and get them pre-qualified or even pre-approved - they don't want to waste their time and resources either.
The only legitimate offer you HAVE TO accept is ALL CASH AT YOUR ASKING PRICE with NO CONTINGENCIES.
Realtor???
Natester, you took the words right out of my mouth. I've bought and/or sold 20 or so properties over the years. Some vacant land, some houses, even a commercial office. I've tried a couple times to "skip the realtor" and go FSBO (for sale by owner) and it never worked out. I've got 2 sitting vacant lots that are still sitting there, with my sign.
Now, I don't even bother. Call 3 realtors, pick the 3 with the most SALES in your area (not listings) decide on the most sensible one (if possible), and just pay them their fee. After all, they are the ones who actually do work on a commission and need to raise the prices. But one thing is for certain, they typically will not "negotiate", they just sit on their butts and let the listing sell itself. Us surveyors can blow all the smoke up peoples butts till they do turn blue, but if they want 7%, they ain't taking 5.5%
The selling agent is the person doing most of the work anyway. But FSBO isn't really the way to go IMVHO.
I feel your pain. I tried to sell my first house myself. Lots of lookers, and nobody had a clue how to get financing by themselves. I finally gave up and listed with an agent.
The agent didn't find a buyer within the listing period. Another agent found a buyer after the listing expired, and the first agent still insisted he got half the commission. He did the closing, and added on a few hundred in "processing fees" he had never told me about on top of the commission. Grumble, grumble.
I bought both of my houses without an agent. I knew where I would get the money, used an attorney to make sure nothing went wrong with the process, and paid him about a tenth of what an agent's commission would be. None of my prospective buyers could handle that.
In some jurisdictions, you have to jump through a bunch of hoops, inspections, and licenses to be able to rent the house. You are on the hook for anything that needs to be repaired while they are renting, and it complicates your tax return. I rented for two months before closing on my sale and had to pay to have the sewer cleaned out after they clogged it up.
>"I said I did not want anything to do with them."
Wrong response. You should have said, "Great - let me know when you have financing lined up to meet my price, and if the house is still available you can buy it."
It doesn't matter who pays what - just watch your net number.
Many nit-picky things you should have been able to fix yourself. In most jurisdictions a homeowner can replace receptacles, just not run new wire. A quick look at a do-it-yourself book will teach you how.
The offer and acceptance contract should have specified the conditions for returning the earnest money. A lot of contracts will say that if the buyer fails to qualify for financing they do get the money back. Exact wording can be critical - the dishonest application might or might not make the difference.
http://www.lexology.com/library/detail.aspx?g=0a0cdcd6-5f3a-4608-bb1b-785029666087
Also, it is probably near universal that if the house fails inspection they can get their money and run.
Anecdote: Friends of mine made a contract to buy a house subject to inspection. Then they discovered the Union Pacific RR double-main line ran just on the other side of those trees. They had visited the house on an off-day, but on their later visit heard a train every 15 minutes. They were very glad the electrical inspection failed.
I found out from the buyer's agent that the title company has the earnest money. I called them and they said that no one had informed them that the sale was off 10 days ago and they still have the money. I told them not to release the money to anyone. The person I talked to said that I would either get the money or it would sit there for eternity if I don't sign a statement to release it back to the potential buyers. The title company is going to talk to their attorney to see if I should indeed get the money due to the situation. What I don't know is if the "money" is an uncashed check being held. If so, it is probably insufficient funds.
That depends... I've had earnest money checks held for short periods, but they usually get cashed.
> I found out from the buyer's agent that the title company has the earnest money. I called them and they said that no one had informed them that the sale was off 10 days ago and they still have the money. I told them not to release the money to anyone. The person I talked to said that I would either get the money or it would sit there for eternity if I don't sign a statement to release it back to the potential buyers. The title company is going to talk to their attorney to see if I should indeed get the money due to the situation. What I don't know is if the "money" is an uncashed check being held. If so, it is probably insufficient funds.
If the agent was a serious professional, they would have advised that you only sign this agreement on the condition that should things fall apart you get to keep the earnest money. If that is the case, the money should be yours. But it sounds like that bit of "what if" either wasn't addressed in the contract or was not addressed in your favor.
If the title company has the funds in their trust account it will not be an uncashed check. The TI Co would be in huge doo doo if that is the case. Trust funds are to be held in non-interest bearing accounts and never, ever co-mingled with operating funds. Co-mingling puts you on the short road to jail and revoked licenses.
Unless your contract is very specific as I describe above, both parties have to sign before the funds can be disbursed. So long as you don't sign, they can't get a penny without a court order. That will give you some leverage. If someone wants to claim that the funds are in the form of an uncashed check, tell everyone at the TI Co to prepare for jail. An uncashed check is a worthless piece of paper.
Larry P
Jerry
Now you know a great deal more about the BS real estate professionals deal with every day. They don't get a penny unless the deal closes yet they have to smile while they put up with every possible excuse for delay or inability to close. Smart real estate people know how to weed out the bums in an ethical and legal manner. But, some bums will slip through undetected no matter how skilled the agent may be.
Pick any number. Say $125,000. A traditional lender will expect the buyer to be able to come up with 20 percent of that. Most potential buyers don't have that kind of money laying around idle unless they have just sold their house or attended Good Ol' Uncle Bob's funeral (no heirs and you are the favorite relative) recently. Therefore, many potential buyers are hoping they qualify for some sort of special lending opportunity that reduces that upfront money down to 10 or less percent. To get that kind of loan one must meet various criteria and the new collateral will need to meet a myriad of expectations. The buyer doesn't have any extra money laying around, so everyone involved tries to push any costs onto the seller in hopes they are sufficiently desperate as to agree. Meanwhile, all of those extras (sometimes involving a land surveyor) take time and dollars off the net proceeds. Many times the seller gets frustrated and negates the deal. More frequently, after all sorts of checklist items have been checked at seller expense, the potential buyer can't make the deal happen no matter how sincerely they want that to happen.
Working on a boundary survey right now for the sale of an 87 year-old lady's home and five acres. The buyer has found a lender in an adjoining state who will resell the loan on the secondary market immediately. The lender is strictly in it for the quick bucks of processing the loan. The buyer sees potential interest rates significantly lower than any local bank can offer. The buyer also happens to be a newlywed couple in their mid-forties where the husband has virtually no credit but the wife is in great standing. They are hoping the seller will pay all of the various expenses in order to make a quick sale. In this case there is no real estate agent receiving a fee. I know both the buyer and seller quite well. I have tried to educate both parties on how this will play out based on my experiences with this type of thing, both for my own real estate transactions and those of hundreds of clients who have been on one side or the other of similar deals. This includes explaining that even though the lender is demanding a boundary survey and description be provided prior to any further vetting of the buyers' worthiness there will almost definitely be a future demand for a number of other things, including my return to draw a pretty picture (mortgagee title inspection or improvement location certificate) per whatever criteria this particular lender happens to use. Having dealt with several hundred different lenders down through the years, I have learned not to try to outguess what they will request and what they will not request. It is far simpler to come back and do only that which is on their checklist than to do everything under the sun right now.
