Release of contract...advice!

16 years ago

We recently went through the process of getting our house ready to put on the market, stressful, but my husband and I got through it. While preparing, some co-worker heard we were selling and wanted to put in an offer. We lowered the price since we both agreed we could save money by not using agents and accepted a contract written by a real estate lawyer knowing they buyers were pre-qualified. We then had an inspection and renegotiated for some shingle repairs and worn carpeting. Three days before we were supposed to move and five days before closing the buyers called us and said they couldn't buy the house because even though they were approved, their mortgage broker couldn't give them the monthly payment they wanted. (BTW, it was a difference of about $250-$300 on a $1500/month payment)I think this is totally ridiculous!! Our lawyer also says they have no legal reason the back out of the contract. we had already moved most of our stuff, now we have no idea how long it will take to get a contract again and don't even ask me where my pots and pans are or my can opener!! essentials even for camping!! I am just so mad!! I don't know what we could have done to make sure this had not have happened. Now my husband wants to list with an agent, which means less potential profit, but in his mind, less hassle. Any advice on hiring an agent versus persuing FSBO?? or advice on preventing stupid buyers from backing out??

thanks!!

Sort by:Oldest

Comments (12)

susana_2006
16 years ago
When I sold my mother's home a few years ago, I did use a listing agent. I had 2 contracts fall through -- I wasn't needing or planning to move, so it wasn't as horrible as your experience. On my third contract, I did't actually remove all my belongings until the morning of the closing. My buyers that cancelled their contracts
did receive their earnest money back -- which I've heard is very common in California.

I hope that you had earnest money -- but they may have had an "out" since the payments weren't acceptable to them. I've always heard that "it isn't over till it's over" and this is especially true in real estate.
Good luck
Susan
User
16 years ago
Your lawyer might be correct, is he an actual real estate lawyer who would know? I doubt it or earnest money would have been in the contract long before inspections happened.

What is the exact wording on the contract they signed? If the contract says dependant on financing and their bank backed out of the mortgage, the deal is over. BUT if with the same wording, and they just changed their mind, they signed a contract, you have ground to stand on.

If your lawyer isn't a Real Estate attorney find one fast.

Just like doctors, not all lawyers can know all and do all. Think about it, you wouldn't go to a foot doctor if you have an ear ache.
Related Discussions
What is essential to include in remodel contracts?
Q
Comments (23)
The first thing to determine regarding liens is whether your state allows a sub-contractor lien to be perfected by a court if the Owner paid the General Contractor for the work or materials before the lien was filed. In other words, find out if your state allows an Owner to be forced to pay twice for the same work or materials. Some do and some don't. If your state allows proof of full payment to the GC as a defense, then you only need to be concerned with detailed billing and payment procedures and those should be described in the contract. Using a Cost of the Work contract helps a great deal in that regard. Second, you need to decide which protection is preferred: a Performance Bond or Lien Wavier/Releases. Both increase the cost of the project for the Owner since the former requires the GC to buy a bond, the cost of which he will pass along to the Owner, and the latter requires the GC to finance the project, the cost of which he will pass along. There is also the issue of the credit worthiness of the GC which can be a problem with small contractors and very low bidders. If you decide on lien waiver/releases, you need to determine if your state requires them to be on state supplied forms. If so, that form should be included in the contract. If, in order to lower the cost of the project, you allow the lien wavier/releases to be conditional (they are made before an owner payment is made and take effect after it has been made) then you might consider using the joint check approach but only if you become worried about the GC's financial situation or honesty. In any event, the generic wording suggested by Bob should be revised to reflect the approach and procedures you decide to use.
...See More
restocking fee for a mistake made by contractor??
Q
Comments (12)
The GC took out the backsplash when he submitted the invoice. He spoke to me on the phone and I asked him if he could find someone else to do our backsplash, he said he would but then never followed through with that. He dropped off the invoice when he knew I wasn't home. And there were no penalties on our invoice. There have been no more tiles ordered, even though I wanted the backsplash at Kato she doesn't seem to want to order it. I've since been working with a tile shop and they've been very helpful. And, I never signed any contracts or was told about a design fee, in fact when I went to Kato for the tiles she had called me and asked me if she could meet me there. She also came to our house one time with granite selection and a few backsplash ideas__again, I didn't ask her or expect her to come to our house. She now thinks I should pay her$250 for these two times. LOL I am a fair person but I'm not a fool! I'm on a teacher's salary and I think it's ludicrous for someone to think they're worth $80 an hour when they botch the job and order the wrong tiles!
...See More
can I sue an inspector
Q
Comments (68)
Even if you have a case (which I find iffy) NO LAWYER IS GONNA TAKE IT! You are moaning about $5000 to fix the chimney. Suing will cost $25000 -100,0000 --- and all you would get is the $5000 at most. (And maybe not that as you could have backed out of the contract so all you would get is a few $$$ for the delay in closing if the seller is paying to fix it.) You do NOT get attorney fees on something like that. You are not gonna get 'pain and suffering'. I would never have taken you as a client --- unless you handed me a $100,000 retainer (expert witnesses, depositions all cost a lot) and singed acknowledging that you were going to spend more - a lot more - on attorney fees than you would ever collect to fix the fricking chimney or walk away from the house
...See More
How to fire architect yet still use plans
Q
Comments (49)
At the risk of repeating myself, an engineer and I inspected a house renovation project where a new 12 ft. steel beam supported a brick wall over a new opening from a kitchen to a dining area. An odd piece of drywall was covering the middle part of the beam so the engineer asked that it be removed and after a short loud argument with the drywall contractor, it was removed revealing large notches cut out of the top and bottom flanges for a plumbing pipe. The engineer showed no surprise and told me he would issue a repair sketch when he got back to his office. I not only inspect all the work in a house as often as I think necessary, I make at least two visits with the engineer. But one thing I never do is speak of a deficiency in front of an owner unless it involves a change in the contract amount. By the way, that GC was one of the best I've ever worked with and I had worked with him before and worked with him again later. He learned to send me photos of critical parts of the work and even sent me progress photos of the framing from a drone.
...See More
mnk716
16 years ago
everyone is right. it all comes down to what your contract states. it is a grey area with regards to a finance clause because technically they were approved but it was more expensive than what they thought.

at best you will probably be able to keep any deposit that was made. you could sue to enforce the contract but i dont think you want to go that route.

good luck
krysib
Original Author
16 years ago
thank you for your replies, yes the contract does have a contigency for the loan, but only for bank approval. They were approved for several, but none that suited thier "ideal" payment. We also do have a specific real estate lawyer, so he is giving us good advice. As 'mnk716' said, and my lawyer also suggested, we could take legal action to enforce the contract...but we don't feel its really worth it.

However, I'm just worried this will happen again regardless of whether we are using an agent or not.

I guess buying a home was alot easier than selling...there were now questions about commitment...
mfbenson
16 years ago
Something doesn't add up. During the pre-approval process they would have been told what the monthly payment on the house would be. I think they just got cold feet.
mnk716
16 years ago
goes to show why i believe buyers should put up 1-5% of the purchase price as a good faith offer. it will make a buyer think twice whether to break the contract or not.

did you have a deposit? it sounds to me they were approved but got cold feet. i would let them walk but without their deposit.
theroselvr
16 years ago
While I might be able to sell our house FSBO since I was an aggressive seller, there were reasons why I wouldn't especially in this market.

I am reading stories of people backing out all over the place, we actually just had one buyer back out during attorney review, thankfully we had another buyer. With the news looking so grim, people are afraid to buy, thinking they will find something better & cheaper down the line. Sorry but I don't have a crystal ball, I don't know if I will find something better then what I did after looking at over 100 houses. 7 months was enough for me.

While you probably could continue to sell FSBO, you might do better to get an agent as they are trained to deal with stuff like this. I know paying the commission is a hard pill to swallow, but in the end who really needs to deal with things like this when you don't have the experience?

Good luck. Hopefully the real estate attorney can figure out a way to make this right.

How many weeks are you into this from the time they committed to now? Just curious.
krysib
Original Author
16 years ago
Thanks for all of your responses....

We were about three to four weeks into the process, they wanted a quick close and we were able to accomadate their request. We just today got them to finally sign the release of contract. They were dragging their feet on that too b/c they wanted their earnest money!!

We decided we would just release them and move on to finding a motivated buyer over taking legal actions, but we did need to retain their earnest deposit for the lawyers fees. But it was now where nere 5%. I have discussed with my increasing are earnest request on future offers but he was hesitant. It is good to know normal practice in between 1-5% (thanks mnk716).

So, we can now move on to accept new offers, but still have yet to decide on FSBO vs RE agent. roselvr makes great point about the market and uncertainty of buyers the days, I definately agree an agent would be better prepared to handle this. The money not "really" being an issue, I just want to move on with my life. We don't have to sell, but it is a great time to build in our area with costs of building supplies down and GC practically begging for customers. We own three acres in the country for our 'dream house'.....so hopefully it'll all work out.
theroselvr
16 years ago
Good luck. Why not see my post below and start interviewing agents? I wouldn't waste much time as it is already April and in some places the selling season will be winding down soon. By the time we listed Memorial weekend of last year the market was about done here. I also had houses I wanted to look at and one agent I was going to use dragged their feet with getting me the info & appointments. I emailed them the MLS #'s and never heard back. Needless to say by the time I decided to use another agent, the houses I wanted to see were gone & then my 7 month struggle to find a house really started.

You can start with a 3 month contract, if it doesn't sell, switch to FSBO until the fall.

Here is a link that might be useful: Agent Interview Questions for sellers
terrig_2007
16 years ago
If you do decide to go FSBO, please have someone else (other than you) write up your ads, fliers, etc. Your spelling and grammar are terrible.
krysib
Original Author
16 years ago
I'm sorry, I didn't know I was being graded!
krysib
Original Author
16 years ago
Thanks roselvr!! Your 'agent interview' is very helpful. I am meeting with a potential agent today and will be using it as a reference!

BTW, Your posts are always so helpful, in this thread and others I have read for advice. So I just wanted to say thanks for everything!

Release of contract...advice!

Comments (12)

susana_2006

User

Related Discussions

mnk716

krysib
Original Author

mfbenson

mnk716

theroselvr

krysib
Original Author

theroselvr

terrig_2007

krysib
Original Author

krysib
Original Author

COMPANY

BUSINESS SERVICES

GET HELP

CONNECT WITH US

Release of contract...advice!

Comments (12)

Related Discussions

krysibOriginal Author

krysibOriginal Author

krysibOriginal Author

krysibOriginal Author

COMPANY

BUSINESS SERVICES

GET HELP

CONNECT WITH US

krysib
Original Author

krysib
Original Author

krysib
Original Author

krysib
Original Author