So sorry about the problems you keep having. I don't have any experience, but I wonder if you could take this to small claims court yourself and get it resolved that way if a lawyer is what it takes.

Forget it and move on. Selling takes enough energy without fighting for $. And here's the real catch, at least in WA: if there is an ernest money dispute you can not sell your house to someone else until the dispute is settled. This happened to us a few years back and we ended up splitting the money with the buyer. But we took the house off the market during that time. I know it aggreavating but just go on trying to sell to someone else. Tom

Oooh, that stinks. I hate dishonest people. We had a similar situation, although not as bad with people who misrepresnted themselves financial. We only lost about a week or so, but it was still very frustrating.

I'd take it to small claims court. It's a minimal amount of time and effort.

So sorry for your mishap.....But like the above post: move on....by the time you take them to small case court, you could of found another buyer.

Just take this as a lesson and learn from it. Now you are aware that there are dishonest people out there;which isn't fair!

Good luck

I'm not sure why taking them to small claims court would hold anything up. You give the money back and then take them to court to reimburse you for taking it off the market for the time they were fraudulently stringing you along.

I agree with your realtor that they misrepresented their financial situation and therefore are not entitled to their earnest money. The things you mentioned: IRS lien, college loan due, selling their car (?), are all things they were aware of - not last-minute medical emergencies or something else that was not foreseen. But, I'm not a lawyer and since your realtor and his partner are in disagreement, I don't know what the answer is. lyfia's suggestion above seems right to me.

As a former seller, I would be spitting mad. I was angry when our first buyer just disappeared without telling anyone, including his own agent. Took us a couple of weeks off the market before it was straightened out and we lost the momentum.

So sorry to hear of this, it must seem like just another bad spot in your saga. I hope you will find the right buyer very soon.

Wow, Demeron, I really feel for you. I bet the third time will be the charm for you.

As for the financing issues, did your contract require them to have a loan committment sooner than the closing? Maybe it's standard where I am (Illinois), but buyers do have to show a committment from the lender, usually within 30 days of signing the contract. Maybe something you would want to look into for the future.

Also, with my sale last year, things got a little sticky and I wanted to go after the earnest money. My attorney told me I could do it, but that it would prevent me from selling my house to anyone else while we were in litigation. Not to mention the legal fees.

My uninformed guess is that if you refuse to release the earnest money, you will have to hold off selling your house until the issue is resolved. Perhaps you could release the earnest money and then go after the buyers in small claims court--but I'm just not sure how you'd show damages, etc.

If you're really considering this line of action, I would speak with a real estate attorney.

Look at your contract dates as to Buyer default for financing contingencies and it's remedies.
I'd say the buyer was in default by not disclosing to his lender the material facts of IRS...Student loan etc., by the loan committment date.
For less headaches, I'd suggest to release the money and move on, if the buyer plays hardball.

I'm sorry, D. You have had a really lousy run of luck. There seem to be more and more stories of dishonest people posing as qualified buyers these days.

Thanks guys. We offered them a 75%/25% split, we'll see what happens. The dissolution of the contract was separated out and that has been signed. I am trying not to mourn but it is pretty depressing. We cleaned, repaired, and made the house terribly appealing, vacated for umpteen showings-- twice. I followed all the advice I could and sold the house quickly-- twice. Now it's empty and forlorn-looking and it is really hard to summon the energy to tackle it a third time. I know there are things to be done but I'm having trouble getting hopped up to do it. It's interesting what someone posted on another thread about emotional vs logical buyers. I really grabbed the emotions of a number of young women with small kids (we've had several offers total, all from people who seemed to be buying right at the top of their ability). I think they responded to our nice things and girly paint colors and had to have it. Somehow I don't think it's going to raise that response now that it's empty! Maybe a cooller-headed type will fall for the new 200 amp electrical :) Here's hoping anyway...

Demeron--

I am so sorry you're going through this.

I did want to offer encouragement that your house can still show well vacant. We have had our home listed (vacant) for two weeks today (after it didn't sell last year with a six month listing) with 16 showings and one offer that we are currently working. Just make sure that your paint is fresh and everything (floors, woodwork, counters, windows, fixtures, etc.) is SHINING. Also consider replacing/updating your remaining light fixtures since there probably aren't any lamps. Many people on this forum (myself included) have said that they prefer to look at vacant homes, and while I understand that people often make an emotional connection with the decor/furnishings of a house, that is truly shaky ground for a buyer which they would realize if they thought about it logically (which they sometimes don't!)

Just wanted to say that I can totally understand your lack of energy to tackle it all again, believe me I am TIRED of it all too. Look on the bright side--you no longer have to vacate for showings. (smile)

I hope you get another offer QUICKLY!!!

I understand your tiredness and unwillingness to do much more. As laura said, at least you don't have to leave for showings anymore. What a hassle that can be!

The house we just bought was vacant and had been for a few months before it went on the market, a neighbor has told me. The owner's son-in-law stopped by every once in awhile to check on it and they had kept the landscaping service contract going.

I liked seeing it empty. Your buyer will come along! And things will go smoothly. Wishing you good luck with #3.

Thanks for the good wishes, guys!

Laura, good vibes to you-- I wish you a quick and happy settlement.

Heard back today that the buyers rejected our offer to divide the earnest money. DH told the listing agent to let it ride-- they can't get the money until we sign or I guess until a court compels us. We may end up in small claims. Have to look through our roll of friends for an attorney who would find it amusing to represent us. I would be willing to split it, I hate disputes. It just makes me mad their stance is this is "not their fault" (hence we get to take the hit)-- I guess they didn't know the IRS wanted 15K from them, or that the husband's student loan would come on line when he finished school? Grrr.

Off to a birthday party, not all of life is real estate...

I don't get the thing with fights over earnest money. I thought the contract protected the seller and that the earnest money was a means to show that the buyer was serious. It follows the law of contracts in terms of "consideration" aka financial commitment. Yet, it seems these people always get away with backing out at the last minute, even when they were dishonest.

Can anyone explain this? How is it that the buyer can refuse to release the earnest money when they were in the wrong and a legal contract was established?

I already hit post and then thought of something else. Talking to a lawyer is a good idea. All it may take is a strongly written letter informing them that you intend to take legal action and reminding them of the validity of the contract. Call their bluff.

If you see they're going to fight, maybe let it go so you can list your house again, but definitely take them to small claims court.

"Can anyone explain this? How is it that the buyer can refuse to release the earnest money when they were in the wrong and a legal contract was established?"

Earnest money release has to be in writing and agreed to and signed by buyer and seller.

Contracts have escape clauses for buyers to get their earnest money back, when certain things donÂt happen. The difference usually is a clause that is the fault of the buyer and the buyer is not entitled to get the earnest money back.
The other clauses that are NOT due to a fault of the buyer, the buyer will get back their earnest money.

In the OPÂs case, it seems to me a buyers fault, and the seller could demand all or part of the earnest money, however, as long as the buyer refuses to sign a release, the money will stay where it is. The only way the get the money would be going to court, or write into the contract initially, that the earnest money is non-refundable unconditionally regardless, but even that can be open to legal interpretation.

Thanks for that explanation Berniek. I'm still confused as to what the purpose of earnest money is if a buyer can manipulate/lie to get it back when they don't deserve it.

As a seller, would it be prudent to write a contingency into the contract that the earnest money is unconditionally non-refundable (except in the case of backing out due to inspection issues)?

It just seems that I've read several posts complaining about the exact same thing - buyer backs out for illegitimate reasons, seller has to fight to keep Earnest money they deserve etc. It just doesn't seem right, especially since the nixing of the deal costs the seller money and the hassle of re-listing.

"I'm still confused as to what the purpose of earnest money is if a buyer can manipulate/lie to get it back when they don't deserve it."

$2k is not enough to bother fighting over.
If you had demanded $10k-20k it might be worth paying an attorney to argue over the money.
The other thing to keep in mind is that you could wind up with the house tied up in the litigation over the earnest money.

"...nixing of the deal costs the seller money and the hassle of re-listing."

Small earnest money deposits have always represented a seller risk.
Asking a court to render a decision takes additional time and money.
If the contract says the earnest money forfeit is 'liquidated damages' you may not even be entitled to any more funds beyond the actual amount in the contract.

Showing real damages in these cases is very difficult.
If the house sells for more than the cancelled contract you would have an even tougher time showing damages beyond carrying costs (to be offest by the additinal gains).

And regrettfully "hassles" are not damages you can collect on.

Get a larger earnest money deposit if you want to ensure a buyer gets to closing.
This is often a problem for first time buyers who simply do not have a lot of cash, and the risks selling 'starter' houses is typically higher.

You could have a clause in the contract saying that the earnest money shall become non-refundable after acceptable appraisal and home inspection AND will be released to the seller at that time. That way sellers actually have the money and don't have to get it released from the escrow company.

terriks, I'm not sure that clause would fly. Every real estate contract we've had has been contingent upon financing. I wouldn't write up a contract without that clause in it. These buyers were deceptive, that's for sure, but how many people do you think would sign a contract which would have them lose their earnest money if by some quirk or unforseen circumstance they couldn't get a loan?

Georgia just changed their contracts for this reason. It is truly buyer beware here. There is a financing contigency period during which the buyer has time to submit a letter of denial from the lender. If they fail to furnish this letter or if they forget to apply, they are assumed to be approved for the loan. If they find out after or did not apply, they will forfeit the earnest money to the sellers. Even if the lender didn't get them the letter in time....they are making it tougher on buyers. There's been a lot of sellers moving out of their homes and getting ready for closing only to find out the buyers where unable to acquire the loan in the contract.
I am sorry you are going through this. I wish you the best of luck. I do think that money should all be yours. If you are looking to buy a house, you should make sure you can financially. Don't just listen to what the lenders tell you.

In the case that truly Demeron cannot sell her home until the earnest-money dispute is finished, can she MARKET her home? And then, just d*ck the defaulting buyers around by holding onto the money until right before she signs a contract w/ a new buyer?

At least make them suffer a little, waiting for the money. Make THEM hire the attorney to try to get it back.

At the very least, I think I'd tell my realtor to take her time "getting around to it."

"In the case that truly Demeron cannot sell her home until the earnest-money dispute is finished, can she MARKET her home? And then, just d*ck the defaulting buyers around by holding onto the money until right before she signs a contract w/ a new buyer?"
Yes, the home can be marketed and maybe even sold, as long as any legal action has NOT been recorded.

I have to check with our agent, but my understanding is the earnest money ? was separated out from the dissolution of the contract, which has been signed. We just didn't sign to release the earnest money.

We're had lots of showings but nobody offering yet (week back on). The carpet in some of the rooms is not in good shape and with the furniture missing it really shows. I don't know whether to replace those carpets inexpensively or just be prepared to deal (the classic dilemma). This is a semi-starter house for our area, so perhaps we should look at replacing, as most buyers offering on this house don't seem to have any money to speak of.

It just feels like the cards have not fallen our way, so it goes sometimes. I'll keep you guys posted.

demerson wrote: The carpet in some of the rooms is not in good shape and with the furniture missing it really shows. I don't know whether to replace those carpets inexpensively or just be prepared to deal (the classic dilemma).

Have you considered having the carpet professionally deep/steamed cleaned? We elected not to replace the carpet (it was fairly high end and in good shape, we're a no shoe family and I had steam cleaned it regularly myself) because to get something comparable was going to be 11K+. We had Stanley Steamer come in and do the entire house. It was ~$750 but the carpets look amazing.

Demeron, I'm sorry that I misspelled your GW name above. :(