WWYD Real Estate Transaction

[amy g.]

My dad died, and left a small house that is completely paid for and is in very bad condition. His wish was that my sister buy me out, and fix it up and turn it into a rental property.

 

Fortunately, she decided that she would be saddled with ongoing expenses and liabilities with no guarantee of profit. We agreed to sell it as quickly as possible.

 

I called a guy who buys houses for cash in any condition. His offer was exactly what I believe the house is worth. We received another offer for $10,000 less and my sister agreed to sell it to the first guy.

 

I'm selling it, basically for the land value, and the contract I signed said "As is" on every single line and also held me not liable for any problems from the buyer or future buyers he might sell to.

 

Closing is Friday, and I've been jumping through hoops getting them the documentation the title company need. Today, they tell me that everything is ready to close, and they sent me a copy of the contract.

 

It bears no resemblance to the one I signed. It is a standard real estate contract between me and a family I have never met. It has me paying closing costs and Realtor fees. it holds me completely liable for everything.

 

I sent it to my lawyer. he called the title company. They had never seen the contract that I signed. He is writing a new contract, and we are bringing it to closing. The buyer can either sign it or not.

 

One of my dad's neighbors has a back up offer on the house. He offered $1,000 more than the first person.

 

It is in my best interest to sell it as soon as possible, but I do not believe the couple buying the house know that it has no heat, and has foundation issues, mold, and everything else you can think of. I'm not even sure that they speak English.

 

What if we show up on Friday with our contract, and they want to sign it. What do I owe...morally...if anything...to this family?

[wapiti]

Didn't the buyer sign the original offer contract with the "as is" all over it?

 

Discuss with your lawyer whether the buyer is aware of the condition and how to handle that. That's what you pay him/her for ;). Why wouldn't the buyer understand the condition? Wasn't there an inspection?

Edited February 9, 2011 by wapiti

[Little Nyssa]

Do what's right. Make sure nobody gets taken advantage of.

[amy g.]

He did sign the contract, but did not turn it into the title company. Instead told them that we would all sign a contract at closing.

[jplain]

Wow. CRAZY. Sounds like the buyers are being defrauded, and the company who offered to buy the house is trying to defraud you too.

 

Honestly, I'm not sure what I'd do about the closing. I'd be tempted to just cancel the transaction completely. Immediately after that, I'd be on the phone reporting this to the Attorney General's office.

[LizzyBee]

So the buyer who offered you the contract found someone else to buy the house instead of buying it himself? And you think he hasn't disclosed the condition of the house to the actual buyer?

 

Most states have disclosure laws. You need to make sure you have proof that you disclosed everything that is required in your state.

[amy g.]

There was not an inspection. I wouldn't agree to one because then I would have to disclose anything found.

 

Our agreement was that i would take 1/2 of the tax value which is just the value of the land in order to be free from any liability.

[Sebastian (a lady)]

It sounds like you are getting swept into something that you are unsure of and which may have legal consequences beyond a simple sale. My gut feeling is that the cash for houses guy that you thought you were selling to is working fast and loose with the situation.

 

I would back away from this. As in I would not even go to the closing. There is no way that I would go to a closing with a family that I had had no previous contact with and expect that there wouldn't be negative outcomes downline.

 

I think your better bet is to go with one of the other buyers who were offering less. Less money for the sale but quite possibly more in the long run.

 

(I think your gut feeling that the family may be being taken advantage of is a good insight. But I also think it is quite likely that you are being scammed too.)

[amy g.]

Actually I have another buyer who is offering more.

 

I knew this buyer was an investor. I knew he wanted to resell it as soon as possible.

 

I feel safe that any contract my attorney writes will leave me okay legally.

 

Am I being condescending to tell people who want to buy the house that I won't sell it to them because I know better than they do what is in their own best interest?

[gardening momma]

Am I being condescending to tell people who want to buy the house that I won't sell it to them because I know better than they do what is in their own best interest?

Tell the cash-for-houses guy that you'll sell to him, and that he must sign the contracts at closing. That's who your agreement was with. Then if he wants to sell it to someone else, he can do that separately at another closing. Tell him you won't sell to the other people because you did not accept an offer from them--you accepted his offer. I'd call and let him know ahead of time. Then if he backs out, you can sell to someone else.

[Jean in Newcastle]

Tell the cash-for-houses guy that you'll sell to him, and that he must sign the contracts at closing. That's who your agreement was with. Then if he wants to sell it to someone else, he can do that separately at another closing. Tell him you won't sell to the other people because you did not accept an offer from them--you accepted his offer. I'd call and let him know ahead of time. Then if he backs out, you can sell to someone else.

 

I agree. You had a contract with the cash for houses guy. He is the one you talked to and had an agreement with. You don't know what he promised this other family. He needs to be directly liable to them as the seller.

[Sebastian (a lady)]

Tell the cash-for-houses guy that you'll sell to him, and that he must sign the contracts at closing. That's who your agreement was with. Then if he wants to sell it to someone else, he can do that separately at another closing. Tell him you won't sell to the other people because you did not accept an offer from them--you accepted his offer. I'd call and let him know ahead of time. Then if he backs out, you can sell to someone else.

 

I agree. You had a contract with the cash for houses guy. He is the one you talked to and had an agreement with. You don't know what he promised this other family. He needs to be directly liable to them as the seller.

 

I think that this is what is bothering me about the scenario you presented. Not that he has plans to resell the house. That is sort of expected. But that he seems to be in the process of pulling something. You don't know what he has said about the condition of the house to the buyers. For that matter, how is he coming into it at all (in other words, how is the cash for houses guy making any money if you are selling to this other family directly)?

 

It is the change at the last minute (change in contract, change in buyer) that sets my spider sense tingling.

 

Update: Have you looked at some of the articles online about Cash For Houses Scams. One of the possible concerns is that a seller could sign over the deed to the house without getting any mortgage paid off.

 

What has your lawyer said about the switch in buyers?

Edited February 9, 2011 by Sebastian (a lady)

[LarlaB]

I think that this is what is bothering me about the scenario you presented. Not that he has plans to resell the house. That is sort of expected. But that he seems to be in the process of pulling something. You don't know what he has said about the condition of the house to the buyers. For that matter, how is he coming into it at all (in other words, how is the cash for houses guy making any money if you are selling to this other family directly)?

 

It is the change at the last minute (change in contract, change in buyer) that sets my spider sense tingling.

 

 

 

Given what is known, I (you asked what we/I would do) would not be a part of this transaction w/ this person- particularly since you have 2 other offers.

[amy g.]

My spidey sense is tingling too.

 

One of the reasons I'm taking a low offer is that I know a potential buyer can not get a conventional loan on the house because of its condition.

 

That narrows the pool of our potential buyers.

 

Dh thinks it is a racket where this guy deals with the potential sellers, and the Realtor finds people who can't buy a house any other way, and his partner supplies the high interest financing.

 

Right now, I feel torn, knowing that someone thinks they are finally going to be able to buy a home.

[amy g.]

My sister just called and confronted him. He said that it is not the family, but another investor that he is selling it to.

[Miss Sherry]

There was not an inspection. I wouldn't agree to one because then I would have to disclose anything found.

 

Our agreement was that i would take 1/2 of the tax value which is just the value of the land in order to be free from any liability.

I doubt this is even legal - as in disclosure laws. Don't try to go through with a sell to someone who does not know the condition of the house. Only sell it to someone who does know, after an inspection.

[mommaduck]

My sister just called and confronted him. He said that it is not the family, but another investor that he is selling it to.

 

Sorry, that is shady to me. Either he shows up at closing and signs the ORIGINAL contract or it's not happening...that is what I would tell him. I would let him know how livid I was that he switched out the contracts (in fact, that would actually be the deal breaker for me...it was dishonest).

[Paige]

I would cancel the agreement and sell to your dad's neighbor.

[JoyfulMama]

Tell the cash-for-houses guy that you'll sell to him, and that he must sign the contracts at closing. That's who your agreement was with. Then if he wants to sell it to someone else, he can do that separately at another closing. Tell him you won't sell to the other people because you did not accept an offer from them--you accepted his offer. I'd call and let him know ahead of time. Then if he backs out, you can sell to someone else.

:iagree:

 

My sister just called and confronted him. He said that it is not the family, but another investor that he is selling it to.

It doesn't matter who the other party is - you should not be involved in the second transaction.

 

Sorry, that is shady to me. Either he shows up at closing and signs the ORIGINAL contract or it's not happening...that is what I would tell him. I would let him know how livid I was that he switched out the contracts (in fact, that would actually be the deal breaker for me...it was dishonest).

:iagree: Absolutely!

[Mother Superior]

Tell the cash-for-houses guy that you'll sell to him, and that he must sign the contracts at closing. That's who your agreement was with. Then if he wants to sell it to someone else, he can do that separately at another closing. Tell him you won't sell to the other people because you did not accept an offer from them--you accepted his offer. I'd call and let him know ahead of time. Then if he backs out, you can sell to someone else.

 

This is exactly what I would do, and exactly what I, as a lawyer, would advise my client to do.

[happypamama]

Having been through good and bad sales, both from the agent side and the buyer/seller side, I vote for at the very least, consulting your lawyer very heavily. I would lean toward canceling this sale. This would make me very nervous.

[JFSinIL]

Wow. CRAZY. Sounds like the buyers are being defrauded, and the company who offered to buy the house is trying to defraud you too.

 

Honestly, I'm not sure what I'd do about the closing. I'd be tempted to just cancel the transaction completely. Immediately after that, I'd be on the phone reporting this to the Attorney General's office.

 

I agree. This entire transaction sounds fishy. The guy who buys houses for cash must have it down to a science - he finds folks eager to sell fast, so they won't fuss over his sleight-of-hand with the contracts.

[gardening momma]

I doubt this is even legal - as in disclosure laws. Don't try to go through with a sell to someone who does not know the condition of the house. Only sell it to someone who does know, after an inspection.

I know here, "disclosure" includes disclosing what you know about a house, even before inspection. So if you know there are mold & other issues, you have to disclose that.

[amy g.]

That makes sense about the disclosure laws.

 

I keep repeating that I know nothing about the house. I never lived in it. I'm just selling it "as is".

 

But the mold is visible.

[Dobela]

Amy, don't do that transaction. Transactions don't go this way. I have been thru many, many with my dad. Wait. Another buyer wants it, a buyer that you trust. I don't even know that I would go to the closing since you were not given the correct paperwork.

[Unicorn.]

I would back out of the whole thing, and sell to the neighbor. He is totally scamming someone, and could possibly get you mixed up in the middle. Tell him the deal is off.

[amy g.]

I appreciate everyone's help.

 

Another thing that makes me mad is that the first time I talked to him, I told him that I wanted to use the title company that I like.

 

He wanted to use his. I looked it up, and it had all favorable reviews, so I agreed.

 

Guess what. We are using a different company with horrible one star reviews, and that has been my experience with them.

 

I did find his listings of my dad's house on his investor forums. He has it listed for $10,000 more than his cost. I'm all for that if he can pull it off, and put the time into marketing it.

 

It makes me less nervous about backing out.

[elegantlion]

Tell the cash-for-houses guy that you'll sell to him, and that he must sign the contracts at closing. That's who your agreement was with. Then if he wants to sell it to someone else, he can do that separately at another closing. Tell him you won't sell to the other people because you did not accept an offer from them--you accepted his offer. I'd call and let him know ahead of time. Then if he backs out, you can sell to someone else.

:iagree:

 

 

My spidey sense is tingling too.

 

One of the reasons I'm taking a low offer is that I know a potential buyer can not get a conventional loan on the house because of its condition.

 

That narrows the pool of our potential buyers.

 

Dh thinks it is a racket where this guy deals with the potential sellers, and the Realtor finds people who can't buy a house any other way, and his partner supplies the high interest financing.

 

Right now, I feel torn, knowing that someone thinks they are finally going to be able to buy a home.

 

But if the home has as many issues as you say, then it won't be a "home" without a lot of work. We buy fixer uppers and buy as-is, but we understand what we are getting into.

 

I would cancel the agreement and sell to your dad's neighbor.

 

:iagree: You don't have to agree to the closing. Many real estate contracts fall apart right before closing. It's not the end of the world.

[amy g.]

I let the cash for houses buyer have it today. I told him that I would not sign anything except for the original agreement with him, and if If I had any more problems, the deal is off.

 

My sister also called him and said, "You had better quit pissing my sister off, because she is HOT and you are not going to be able to handle her."

 

He agreed to pay our attorney fees plus an extra $1,000, and I got an email from the title company saying we would be using the agreement I signed.

 

We will see what happens.

[simka2]

I let the cash for houses buyer have it today. I told him that I would not sign anything except for the original agreement with him, and if If I had any more problems, the deal is off.

 

My sister also called him and said, "You had better quit pissing my sister off, because she is HOT and you are not going to be able to handle her."

 

He agreed to pay our attorney fees plus an extra $1,000, and I got an email from the title company saying we would be using the agreement I signed.

 

We will see what happens.

 

 

You go momma! :D

[Parrothead]

Continue to do your research and keep on top of things until Friday. He is liable to be doing some fast talking trying to placate you and your sister. If anything sounds, smells or feels hinky on Friday refuse to sign.

[elegantlion]

Continue to do your research and keep on top of things until Friday. He is liable to be doing some fast talking trying to placate you and your sister. If anything sounds, smells or feels hinky on Friday refuse to sign.

 

Agreed!! My mom almost walked on a house dealing at closing because the paperwork was so screwed up. They placated her enough after my dad pulled her off the ceiling, but in hindsight there were some fishiness going on at the bank level that never really got straightened out.

[Miss Sherry]

Watch out. Sometimes someone will try to have a form presented to you when you go into sign at the Title company that is not supposed to be included. I've had it happen. Then the Title company plays dumb,doesn't know if it's legal to add that form (yeah, right :tongue_smilie:) - as if they didn't know it wasn't part of the deal. If something seems off make a call to your lawyer before signing it.

[justasque]

Read EVERY SINGLE WORD of everything you sign. Even if you are there for hours. Even if your lawyer has read it. Ask for an explanation of ANYTHING that is not clear. I have done this each time I bought a house (and a few times helping others). Yes, most people don't do this. Yes, they may roll their eyes or worse. But it is your right to do so, and you SHOULD. Do all the math calculations too. Make sure you know what EVERY fee is for.

 

And seriously consider the offer from the neighbor. He has a vested interest in making sure all is well, as he lives in the neighborhood and his original house values are impacted by negative things that happen with other houses in the area. The cash-for-houses guy doesn't have this kind of skin in the game.

 

I know you want to sell this house quickly. But slow-and-clean is MUCH quicker in the long run than quick-and-dirty.

 

Good luck.

[amy g.]

Unbelievable, they are still sending incorrect paperwork.

 

My attorney believes that the title company is truly this grossly incompetent, and that the buyer is not at fault for anything except choosing this company without my permission.

 

Here is a copy of the email I just sent the buyer:

 

"I intend to be at the closing at 1:00 tomorrow. I will not be paying my attorney to attend the closing. I will not be calling my attorney from the closing. If the paperwork we are given there does not exactly match the paperwork we have received from him. I will simply walk out, and spend the rest of the day shopping with my husband.

 

I have been assured that I have no legal obligation to you.

 

When I think of the unnecessary trouble and expense we have been put through as a result of your unilateral decision to use a title company that is over an hour from my house instead of the company I requested which is 15 minutes from my house and which does not require additional signatures from all heirs for their own protection, I am rapidly coming to the conclusion that I have no ethical obligation to you either.

 

It would be nice if we show up tomorrow, and everything is as it should be, and we can sell the house to you, but I am not out anything if that does not happen. As per the inventory filed with the court. My father left over $300,000 in assets. If we close tomorrow, I will simply let the money sit in the bank for 3 months until I am ready to settle the estate.

 

If we do not close, I will sell the house to my father's neighbor who has also given us a cash, as is offer. There is no disadvantage to me in doing so.

 

I just wanted to be certain that you understand my position and are not taken by surprise when I refuse any further negotiations if every letter and punctuation mark is not in perfect order tomorrow.

 

Thank you for your time,"

 

The grammar and run on sentences are awful, but I'm too angry to think clearly.

[justasque]

I am rapidly coming to the conclusion that I have no ethical obligation to you either.

 

IAMAL, but IMHO: Just to be clear - you do NOT have an ethical obligation to him. This is business, plain and simple. If you do not like his terms, or anything else about the transaction, you are certainly not ethically obligated to complete it, especially under the circumstances. You do not need to be able to articulate a reason, or to defend that reason. If your lawyer says you have no legal obligation to go through with it, you can simply say you prefer not to continue, at any point, for any reason.

 

I did this once in a house transaction. We had been looking seriously at a house, only to realize, *well* into the process, that the realtor was showing/selling her *own* house - something she had not disclosed and in fact had intentionally hidden. ("The owner says/feels/wants this-and-such...", she would say.) That was enough to kill the deal for us. We did not offer a reason.

[RanchGirl]

Amy, don't do that transaction. Transactions don't go this way. I have been thru many, many with my dad. Wait. Another buyer wants it, a buyer that you trust. I don't even know that I would go to the closing since you were not given the correct paperwork.

 

This sounds bad on many levels. I would skip the closing and cut off all communication to the buyer. You have no legal or ethical obligation and you have real reasons for canceling this. It sounds so much better to sell to the neighbor who will have a vested interest in fixing up the place, plus he offered more money anyway? I can't imagine why you're not pursuing that option.

[Aubrey]

IAMAL, but IMHO: Just to be clear - you do NOT have an ethical obligation to him. This is business, plain and simple. If you do not like his terms, or anything else about the transaction, you are certainly not ethically obligated to complete it, especially under the circumstances. You do not need to be able to articulate a reason, or to defend that reason. If your lawyer says you have no legal obligation to go through with it, you can simply say you prefer not to continue, at any point, for any reason.

 

I did this once in a house transaction. We had been looking seriously at a house, only to realize, *well* into the process, that the realtor was showing/selling her *own* house - something she had not disclosed and in fact had intentionally hidden. ("The owner says/feels/wants this-and-such...", she would say.) That was enough to kill the deal for us. We did not offer a reason.

 

Wait--did she at least disclose that she was representing the seller? Because that's a HUGE...shoot, I forget what it's called. But if a realtor is not representing you exclusively, they have to say so. And everything I've read says that it's in your best interest to have a separate realtor from the seller.

 

Gah. Glad you walked.

[justasque]

Wait--did she at least disclose that she was representing the seller? Because that's a HUGE...shoot, I forget what it's called. But if a realtor is not representing you exclusively, they have to say so. And everything I've read says that it's in your best interest to have a separate realtor from the seller.

 

Gah. Glad you walked.

 

We knew she was representing the seller. We just didn't know she WAS the seller. If she had disclosed that, we wouldn't have had any problem with it. It was the deception that turned us off. I'm glad we walked away - the house we ended up buying was perfect for us!

 

OP, keep us posted...

[Tylianna]

We knew she was representing the seller. We just didn't know she WAS the seller. If she had disclosed that, we wouldn't have had any problem with it. It was the deception that turned us off. I'm glad we walked away - the house we ended up buying was perfect for us!

 

OP, keep us posted...

 

The seller in our case was the Realtor's husband. We had to deal with a lot of crap to close on this house, because OUR realtor was friends with the other, and the seller was her husband.

 

We ended up losing $1,000 and a lot of time because of that. But, the house was worth it, so...