Something is not right here... there is not a single lender in the US that would have gotten a buyer to the day of close, or even pre qualified, when they knew that the person would not qualify unless some future money was coming in. If I messed around with buyers that told me that some money was coming in very soon, I would never make it to a closing.

You need to ask your agent to really question the other agent about this... did you receive a pre qualification letter from the buyers lender? I bet the lender is asking for PAST tax returns, not waiting for this years return. This smells bad. But having said that, what do you have to lose by giving them an extension? If they do happen to close, your home purchase may be salvaged. If you terminate the deal, you know for sure that your home purchase is done for.

For peace of mind, try to get your agent to come up with what is really going on, because as of right now, I don't think you have the rest of the story.

Thanks for getting back to me. Talked to the buyer's loan officer this morning and he says he kept advising the buyer that she needed more time, but the buyer I guess ignored his advice. I am mad at the buyer's agent at this point, because he knew of her situation from the loan officer early last week but did not inform us until Friday afternoon. The loan officer said that "lots of things happen or don't happen at the last minute, and that if a buyer is qualified (she had a pre-qual letter) they don't look that closely at exactly where the funds are coming from at the point of pre-qualification. Not sure if this is common, but that's how he was explaining himself. Apparently the buyer is not very knowledgable in how the home sale process works, as she did not file her tax return until she signed the contract one month ago. She also did her taxes herself, otherwise they could have gotten a copy from turbotax. What a mess! Also, she foolishly was under the assumption that she could still close on the house without the OK to close from the lender! Yeah, I believe in magic, too!
Am calling the agent of the house we are buying next and will see if they agree to a 10 day extension, but at this point not sure if it makes a difference.
We have no agent representing us, we used a flat fee listing service and it does not help with contracts or negotiation.
I am thinking with buyers so flaky, what's to say that the rest of their down payment will be there for closing?

First off... the lender is acting unethical if not unlawful by speaking with you and disclosing details of his client's financial situation! Good for you, though for trying to get some answers. Again, if the deal was supposed to close tomorrow, the lender would have already sent the package to the underwriter a while back and they would have put a halt on the loan a long time ago. Not one day before closing. Also everyone would have known that funds were not there to close w/in a week of the contract being signed, because as soon as the buyer applied formally for the loan, the buyer would have had to print off statements from somewhere showing secured funds in the amount to qualify. Something is still not right here.

NC, I don't see that the lending agent said anything about finances -- only that he told the buyer they weren't allowing enough time to get to close.

Between the misrepresentations by the buyer's realtor about their finances and proceeding with the unrealistic closing date and the clueless buyer, I'm not sure I would hold my breath. Unfortunately, you have a greater risk of these crazy situations when you do a FSBO. If you are in a market that is covered in snow and not likely to get showings or offers for the next couple of weeks, you may not have much to lose by giving them some additional time but I'd be firm that it closes by that date or you walk -- and I'd start making plans for relisting the property. You might want to consider finding an agent to represent you and help avoid future problems.

houseseller-
I'm not going to advise you on what to do with your flaky buyer, but let me say something about the house you are trying to buy. Several years ago we were casually looking when we saw a house that was a tremendous deal and we decided to buy it even though the house we were in wasn't even on the market yet. The price was so good on the house we were buying that the seller would not accept a contract contingent on our being able to sell our house, so although I am usually very conservative financially, we decided to make the leap. When it came time time to close, our old house was still up for sale. To get cash to close on the new house we got our existing mortgage lender to make us a "bridge loan" as we had huge equity in the old house. At closing we owned two homes and had interest-only payments on the bridge loan and on a smaller mortgage for three months until we finally sold the old house. It was tough seeing a couple of thousand dollars a month going out the window on the bridge loan, but it was worth it to us in the end. So, if you have the capability to handle this approach financially and are really in love with the new house, this is one option you have. It's scary, but it's one way you can go. Good luck.

Ok, we are now going to sign an extension for 10 days. We would like to include an addendum that says we will be entitled to the buyer's earnest money if they fail to close on the closing date for any reason. The buyer's agent is saying this is "illegal" and refuses to write the addendum. Is he just bullying us?

That is an issue governed by state law and something someone with specific knowledge of your state laws would have to answer. Earnest money is often specified to be the liquidated damages for not closing on a property. You might also be able to give them a 10 day option to purchase for a specified price (which might sound a lot like the earnest money amount). These are things that realtors and real estate attorneys are used for. FSBO may save on commissions, but they can also attract the problem buyers, agents who would take advantage and leave you without anyone to count on.

I'm not a realtor, but I tried a FSBO once. When they work, great. When they don't, it can be more painful than the commission. Be careful.

Most RE contracts have wording to the effect that the closing date is NOT a "Time is of the essence" date. Meaning that it is not a drop dead date. Your contract also probably states that if the initial closing date is delayed, and the delaying party is showing good faith in moving forward, then the closing date will be moved up a certain amount of days. Herein NC, it is about two weeks.

Your contract should also state very clearly what happens to the deposit if the buyer can not close due to the buyer not able to get financing. No need IMO for an additional addendum. I bet it is already spelled out in the original contract.

It is, in fact, illegal for a RE agent to write contract law, because they are not a principal of the transaction. But any one of the two parties, the buyer or the seller, can.

Reread your contract very carefully and see if your questions and concerns are addressed. I bet they are, because your current scenario is not all that unique.

housesellerc-
I'm not a real estate lawyer, but I think you can write up any addendum you want if the other party signs off on it. I think the objection of the buyer's agent is that he is trying to protect a flaky client who will be very annoyed at him when 10 days rolls around and there is no closing and you collect the earnest money. It's good he is trying to protect his client, but I am afraid it also shows that he is dubious that that client is going to be able to pull this off in the 10 days you are allowing.

I get the same feeling. Perhaps even that she knows the seller won't be able to close in 10 days.

Housesellerc, I am a homeowner whose buyer walked away 3 days before closing. With our attorney's advice, when the buyer bailed out, we took possession of the earnest money.

You are dealing with contract law. Get legal advice.

I personally wouldn't do it. If you had a bad feeling about them in the first place, that may change my opinion. As a buyer, I wouldn't be comfortable signing that, if there was any chance my mortgage wouldn't work. I suspect they would just not sign it, then you lose the deal.

I signed a deal a couple of weeks ago for a building lot, we got pummelled by snow and the bank closed for a week. I am not sure I am going to make my target closing date two weeks from now and I am putting down 75%, with good income and a good credit score. Real estate loans have slowed down a lot, they can take a bit longer than they used to.

Thanks everyone for all your good advice. Our contract is the usual one that states that the buyer will get the earnest money back if they can't get a loan. I am tending to agree with Kudzu9 that this agent is trying to protect his client who he knows may not make it to closing even with the extension. It is just so frustrating that we can't make her have more skin in the game. I told the agent that she should not have any problem signing the addendum if she is confident she can close. I don't think it is being unreasonable to be compensated if she can't fulfill her part. Agent said yesterday that they are still waiting on one year's tax return. What kind of person buying a home does not keep a copy of their tax returns?
Thank you for letting me vent. I am so tired of the back and forth with this agent and his condescending tone bragging about how he used to be an aerospace engineer and a sales manager for global markets, blah blah blah. And him telling us we must be "worried" and "scared" and "unsure" without having an agent to bounce things off of. We have a call in to our flat fee listing agent for his advice. We will see if that type of an addendum is illegal. I was under the impression also that you could write anything you needed to change about the contract in an addendum, like Kudzu9 says.

Thanks everyone!

I know this is stressful and I am not trying to pile more on, but you could be waiting a long time for tax return copies to come in. The IRS has had its staffing cut and it is also six weeks before tax filing deadlines, so they may well be overloaded. I just don't like the smell of this, and their agent sounds like a both a sadist and a nincompoop to be trying to rattle your cage...which is only likely to backfire. Let the ten-day clock run, but at the end of that time, you may want to consider walking away. You want to sell and you are letting these folks string you along while you could be missing out on a more qualified buyer. At some point, if they qualify, they can come back to the table, but, in the meantime, start looking for better buyers.

I have never heard of a contract that does not put a time limit on the buyer to obtain financing. After that date, the deposit would be turned over to the seller. You should have never signed a contract that allows a buyer to be able to go up to the day of close, then be found in breach, and yet retains the deposit.

I would (as a seller), type up the addendum, send it over to them, and put a time limit on returning a signed copy. The agent can not write it up. It is time for YOU to take control of what happens next. Also, does your contract address what happens if the closing is delayed? You have not stated.

I think you should walk. If they get their act together and want to buy the house, they can come back with all their ducks in a row. Until then, unless your market is so slow or this deal so good that you can't imagine getting another offer in the next 60 days, I think you should move on. This deal has a number of red flags. March is entering prime selling season and you are possibly losing better exposure to a better and easier transaction. The further this goes, the less good it sounds.

Yeah, except that OP's got a house they're trying to buy and could lose if this deal falls through.

Is that a typo in the 2nd line lascatx? :-)

Yes it was. Oh dear. What a morning. Thanks.

My mom and my first realtor told me that things happen for a reason, and if it's meant to be, it will happen. I didn't believe them then, but I did find a better house for a better price -- right across the street and down a few. How had I missed it before? I know first hand that it sometimes feels like the whole world depends on getting something, but something better may be around the corner. At the minimum, it is a time to check your emotions and make sure they aren't leading you to give up too much for too little.

weedyacres-

Precisely...which is why several of us are suggesting it's time to abandon this sinking ship, get the house back on the market, and find a qualified buyer ASAP.

Are you sure they are not waiting for the form 4506-T? My last lender had me bring in tax returns but then waited for the transcripts from the IRS before closing.

OP here. We consulted with the broker representing us, and he said it is quite common for sellers in our situation to have an addendum stating that the earnest money deposit will go to the sellers in the event the buyer cannot close on the date that they agreed to extend to. We then prepared our own addendum with the language our broker suggested, and the buyer's agent said it was still "illegal" and his buyer would not sign, and that his broker would not allow it.
My husband talked to the buyer's loan officer late in the afternoon yesterday and we finally unearthed the truth. Thank goodness someone was willing to tell it. The buyer's situation is even more shaky. On top of waiting for the IRS tax return, IRS tax statements, she is scrambling to get her down payment together and is looking for gift funds from family. The chance of this happening is slim to none because apparently she is the sole financial caretaker for her own family and extended family as well, so essentially there is no family with any money.
In the back and forth from the agent, he was very unprofessional to say the least. At one point he sent us an e-mail at 1:30 in the morning describing a very personal situation with one of his customers and how "they are all working together to get the deal done" This e-mail named first names of all the parties involved and what suburb they lived in etc. and very personal details. He said he sent this to show us how other people can work through situations to get things done. An email at 1:30 AM, maybe he was drinking?
When we e-mailed back to tell him we would be going no further in the deal because he had been not telling the truth about the buyer's situation, and pointing out his unethical behavior in sending us that e mail about his clients, and the discrepencies between what the lender said and what he was reporting to us, he must have lost it. He sent an almost unbelievable email back saying we didnt know anything about real estate and how he kept his cool when dealing with "people like us". And how he hoped it would take months to find a new buyer and sell our home, and how we are being so petty over a simple extension.
We got the release and are signing it today.
What a cautionary tale. We have bought/sold three homes already by owner, and have never had any trouble at all. Last night I had tears in my eyes as I was telling my realtor that we could not proceed with the sale for our new home. I just couldn't picture someone else in that nice little home that was perfect for us.
Well, time to move on, today is another day. I have to decide whether to unpack all the boxes or not. We have been living on the bare necessities since we thought we would be moving yesterday. Do you all think we should rent a storage unit and put the boxes in there, or unpack and stage the house again? Thank you everyone for listening and responding, I appreciate it. It makes a world of difference to have people to bounce things off of.

I am so sorry to hear that this did not work out for you, but I am glad that you are not going to be strung along by these "buyers" and their unprofessional realtor. What you just related confirms all the warning signs several of us feared about this situation. The good part is that you won't be wasting even more time and can move on to finding a real buyer. As to the home you wanted to buy, is it possible to make an offer contingent on selling your home, or setting a closing date several months off? I once bought a home and got the seller to agree to a closing that was three months off from when we actually closed (it's true that it took us another 3 months beyond that to sell our house, but at least we had a breather before we had to get bridge financing).

I don't know what to say about unpacking, which sounds like a lot of work and frustration. What if you stored everything for a month or two, and paid a staging company to install rental furnishings? A professional stager might make your home more attractive than using your own furnishings, and it might sell more quickly. However, only you know what your local market is like and how fast homes are selling.

Good luck to you, and best wishes for a speedy sale and resolution. You deserve it after all this.

P.S.: Although it is good to move on, you might want to forward the nasty email to the realtor's boss, if he has one. Sending this info to a supervisor does not need to be couched in terms that could be interpreted as vindictive, and should be appreciated by any supervisor who was serious about maintaining a reputable and professional real estate practice.

Although in glad you are not being strung along anymore i find really unethical for the buyers lender to be talking with you about her finacial situation. That is so odd that you would even contact them. Her financial state is confidential. Was there anyone else interested in your home?

I would have still tried to go forth with purchasing the home you liked.

Anyways,

What a horrible situation.

Good luck in the future.

I thought the same thing about the lender being unethical so I looked it up. My, only slightly informed, understanding is, they can't talk about a buyers income, credit score, etc., but can talk about things that help establish the likelihood of the loan going through. Maybe a real estate professional will have more answers.

Given that the lender was aware of misrepresentations by the buyer and agent, don't you think that even if the down payment got scraped together, the loan might still be in question? I suspect the lender was questioning the truthfulness of info on the application and was going to dot every I and cross every T before making any final decision.

Housesellerc, bottom line is that the OP needs to move on. If you love the home you were under contract for enough and don't see anything else that checks the boxes, do explore all the options. This is another area where a good agent might be able to help you. I'm sure you were trying to save money and thought you couldn't afford to, but sometimes you can't afford not to. I wish you the best.

As far as storing, unpacking and staging, without seeing where you are, it's hard to express any opinion at all. Generally, you want your home to show well, but homes that show the seller is ready to move with packed boxes and such may draw quick offers. They could also draw lower offers, and if you aren't working with an agent, you could see some more quirky deals presented because you look desperate. At least talk to an agent or two and get their input. Maybe even the other seller's agent. If she doesn't have another buyer lined up, she may have even more incentive to help you save that transaction, though the sellers may have to agree to her representing you or she might bring in another agent form her office to help.

It's probably a fine line... but telling the seller where the down payment is coming from is talking about the buyer's income IMO. The lender was probably just as tired being strung along as the seller was, so was eager to get the deal terminated. Strangely enough, lenders do not owe a fiduciary responsibility to their customers as RE agents do.

Also, IMO, the buyer's agent did nothing wrong until he/she became rude. As far as him stringing the seller out for as long as possible to enable his client to find any route possible to close, is just business.

A good listing agent would have seen the red flags of this deal a long time ago. Like when they would have asked for a loan commitment letter, only to find out that there was none. Or when the closing attorney told them that there was no loan package delivered yet, nor anything being asked by the lender from the attorney. Or the fact that there was an open buyer contingency that survived the closing date. Or the fact that the language in the contract did not allow the seller to receive the deposit if the buyer's financing fell through after a certain date...

Hello everyone, OP here again. Well we are under contract again with new buyers with conventional loan, bigger downpayment etc and comparable price. It happened quickly over the weekend with tons of showings. We actually had two offers! Best of all, the sellers of the house we want have agreed to still sell to us, and we have a new contract with them as well. I am so happy, and I didn't even unpack a single box.....just cleaned again like crazy.

I was thinking about you and wondering what was happening. Thanks for the happy update :-)

Wow, so glad it all worked out! Home selling gods are smiling.

Good to hear Houseseller. Hopefully this contract is a little "cleaner" than your last one as far as not being so buyer biased.