The saga continues......

[DawnM]

Yikes.   Things have gotten very dicey.   Very.

So I mentioned that the seller of the. house we were trying to buy demanded more money before they would sign the extension to close on the house.   We refused.   He then sent a nasty email to me and our realtor says that he has the upper hand and will walk with our money and forgo to the sale.   Of course this makes no sense for someone who has been trying to sell their house for over a year, so we were quite confused.

Our realtor shot off a Nasty email to him saying that he owns US the money back because he didn't do what he was meant to do.

He shot off an email back and said, "You don't know what you are talking about, pony up another $10k!"   He also sent some photos of the contract where it said that the contingency was check marked but next to the checkmark it clearly says, "If this is contingency offer, an addendum must be attached."

Our realtor never wrote the addendum.    She missed it.   This is important to note for later in the story.

Then our realtor has turned everything over to their attorney at their firm who started digging and found......get this......the seller can't even legally sell that house.   He filed for bankruptcy in May and foreclosure in June.   The courts have to sell the house!~

Not to mention, in the listing he checked the "no liens on the house" and yet there are THREE liens on the house.

So, we are told because of that we can get all our money back and walk, but we are waiting for the final word on all of that.

At this time, we are VERY gun shy and plan to sell our house, have the $$ safely in the bank, and THEN go find a house.

Meanwhile......our realtor was confronted by my husband today.   He has had it.   He is very nice and friendly and I am the one getting all upset usually, but he finally saw that I had seen in her for the past several weeks......she is clueless!   He point blank confronted her on the addendum AND a couple of other issues she has messed up and she hemmed and hawed to try to get out of it.   My husband said to her, "You are talking in circles!   I asked you where the addendum is!"   She still went around in circles so he said, "Well, I am not getting a straight answer out of you, but we are going to have our own attorney look all this over."

He said she seemed visibly upset.   She knows she messed up.

We don't know what will happen, but we will not use her to buy our next house.

[Lecka]

If the seller is already in foreclosure are you going to close soon enough?

 

Is the seller just plain committing fraud?

 

This sounds so troubling, and the realtor is only one part of it.

 

It doesn’t sound like the sell is going to go through, I hope you guys aren’t stuck with this house, I hope you can get out of it!!!!!!

 

Definitely new realtor.  You guys just wouldn’t be able to trust her again.  
 

She will still have the commission from selling your house, I guess? 

[footballmom]

So bizarre! I wonder if the seller was going to use the $10k that you’re never going to pay him to get caught up on payments with the bank?

[Clarita]

That's CRAZY! 

[cintinative]

I need to ask a stupid question for my own benefit.  When we bought our house 15 years ago we had to get title insurance which showed that the title is clear. Is this no longer required?

[mommyoffive]

Oh man this has been a stressful road. I am just sending some calming thoughts your way.   

[lauraw4321]

1 hour ago, cintinative said:

I need to ask a stupid question for my own benefit.  When we bought our house 15 years ago we had to get title insurance which showed that the title is clear. Is this no longer required?

That’s usually provided at closing. Did they actually close on the house? I’m also confused. 

[Grace Hopper]

I know some of this is your own agent’s fault, but I wonder if some of these problems are due to the seller doing a for sale by owner. A listing agent may have been able to tease out issues before listing the house. 
 

Hope things work out in your favor, however they shake out. 

[Grace Hopper]

Curious - did your agent not give you a copy of the paperwork submitted when you made the offer? I mean, it seems like you would have been aware that an addendum was needed, as the actual buyer paying attention to the details of your transaction. 

[DawnM]

7 hours ago, Lecka said:

If the seller is already in foreclosure are you going to close soon enough?

 

Is the seller just plain committing fraud?

Yes, it is fraud.   I don't know what you mean by am I going to close soon enough????

7 hours ago, Lecka said:

 

This sounds so troubling, and the realtor is only one part of it.

 

It doesn’t sound like the sell is going to go through, I hope you guys aren’t stuck with this house, I hope you can get out of it!!!!!!

We are not buying the house.   In fact, we can't because the title isn't clear.

7 hours ago, Lecka said:

 

Definitely new realtor.  You guys just wouldn’t be able to trust her again.  
 

She will still have the commission from selling your house, I guess? 

She will get the commission for our house.

[DawnM]

7 hours ago, cintinative said:

I need to ask a stupid question for my own benefit.  When we bought our house 15 years ago we had to get title insurance which showed that the title is clear. Is this no longer required?

I have no idea.   I just know they pulled the title as soon as they saw he had liens on the. house that he did not disclose.

No, we didn't close.

Edited September 16, 2023 by DawnM

[DawnM]

3 hours ago, Grace Hopper said:

I know some of this is your own agent’s fault, but I wonder if some of these problems are due to the seller doing a for sale by owner. A listing agent may have been able to tease out issues before listing the house. 
 

Hope things work out in your favor, however they shake out. 

Yes, he doesn't know what he is doing.    He really doesn't.

3 hours ago, Grace Hopper said:

Curious - did your agent not give you a copy of the paperwork submitted when you made the offer? I mean, it seems like you would have been aware that an addendum was needed, as the actual buyer paying attention to the details of your transaction. 

Yes, however, we saw the "contingency" part checked and she told us she had done things correctly so we didn't know if the addendum was between her and the seller or if there should be in the paperwork.   We know to ask next time, but we didn't think much of it since the paperwork said the word contingency on it several times and then the box was checked.   Of course we will never make that error again, but we just didn't know.

And she kept saying, "You need to trust me, I am the professional" which at first was reassuring and then got annoying and now infuriates me.

[DawnM]

7 hours ago, footballmom said:

So bizarre! I wonder if the seller was going to use the $10k that you’re never going to pay him to get caught up on payments with the bank?

He owes a couple hundred thousand.   He never finished fixing the kitchen, which was part of the contingency.   I think he is out of money and needs the $10k to finish fixing the kitchen.    Although that part didn't need an addendum.   

The $8k will have to be another lien on the house as he doesn't have it to give back.   

[Katy]

Wow that stinks. I’m sorry Dawn. 

[scholastica]

The $8k wasn’t held in escrow?? I’m so sorry for the mess you are dealing with.

[TexasProud]

Oh, my goodness.  What a mess.  So sorry, Dawn

[DawnM]

1 hour ago, scholastica said:

The $8k wasn’t held in escrow?? I’m so sorry for the mess you are dealing with.

No, the $10k was.   The $8k was given directly to the seller.

[math teacher]

Buying and selling houses is never easy, but this is over the top. 

So sorry. One bright side-at least you have a lot of things already in storage, correct?

[DawnM]

21 minutes ago, math teacher said:

Buying and selling houses is never easy, but this is over the top. 

So sorry. One bright side-at least you have a lot of things already in storage, correct?

Yes, we have two storage units completely full.   We will need a 3rd OR we will get PODS, although I don't think PODS is best just because a lot of the stuff is larger, like the riding lawn mower.   DH wants to ask a friend if we can store it in their garage, but we will see what happens with that.

[teachermom2834]

Sorry for all you have gone through. Our sale and purchase has gone as seamlessly as possible (though fast) and I am totally and completely exhausted. It’s so much even on a good transaction and what you have dealt with is a nightmare. 
 

And I understand how you missed that the addendum was missing. Of course we all know to check every detail and not to sign anything you haven’t read but when you are selling/buying there are so many documents back and forth and sometimes stuff can just slide by. Dh and I would get documents and do “hey did you read this?” and then sign without going over it ourselves. Or we trust our realtor so we will just say “what am I signing” and trust what she tells us. I know intellectually that it is wrong to do that but we all have lives to lead and limited mental bandwidth and you know, we are human, so mistakes do get made. 
 

I hope things turn around for you soon. I would be beside myself so I know how frustrated you must be. 

[Lecka]

I thought maybe the seller was going to try to pay the bank off with the $10,000 so he could get the house out of foreclosure and sell it to you — I guess that was never going to happen!  I thought maybe there was some kind of good-faith effort being made, and I couldn’t think of anything else that might make sense.  

 

I also do read stuff, but I rely on professionals to be professionals.  
 

 

Wow, I’m so sorry all of this has happened.

 

I don’t know what is wrong with people sometimes!  
 

 

[Bambam]

If the house you were interested in buying is a wonderful house (except for the unfinished kitchen), can you approach the bank that foreclosed on the house to try to buy it from there (if you are still interested)? Banks don't want to own houses, so maybe that deal would work out better? 

[lmrich]

What  if  any is your obligation to your realtor for  buying a home? Can you start with  a new buyer's agent? 
I am so sorry.

[DawnM]

8 minutes ago, Bambam said:

If the house you were interested in buying is a wonderful house (except for the unfinished kitchen), can you approach the bank that foreclosed on the house to try to buy it from there (if you are still interested)? Banks don't want to own houses, so maybe that deal would work out better? 

Considering the .25 acre property next to us has been in foreclosure for 4 years, and it is also a nightmare, I don't think that will happen any time soon.

Also, my friend's house went into foreclosure in TX and they lived in it for several years before the banks finally kicked them out.

[DawnM]

6 minutes ago, lmrich said:

What  if  any is your obligation to your realtor for  buying a home? Can you start with  a new buyer's agent? 
I am so sorry.

We are obligated until Oct 15 or we need her to sign off her rights to be our buying agent.

Our house is meant to close (selling) on Oct. 10, so we thought of just waiting until it is expired but now I am thinking that isn't the smartest, we need to start looking.

Anyway.....wish us luck.  I just contacted another realtor about showing us some homes.   

I worry that if I ask the agent we currently have. to sign off her rights to buy a house for us that she won't work as hard on our house sale, but maybe that is wrong of me to think?  I mean, it isn't professional, but she hasn't really been professional, so.....

[Grace Hopper]

12 minutes ago, DawnM said:

We are obligated until Oct 15 or we need her to sign off her rights to be our buying agent.

Our house is meant to close (selling) on Oct. 10, so we thought of just waiting until it is expired but now I am thinking that isn't the smartest, we need to start looking.

Anyway.....wish us luck.  I just contacted another realtor about showing us some homes.   

I worry that if I ask the agent we currently have. to sign off her rights to buy a house for us that she won't work as hard on our house sale, but maybe that is wrong of me to think?  I mean, it isn't professional, but she hasn't really been professional, so.....

If she is simply the agent, she works under a broker or agency manager. You could make an appointment with that person and talk about the situation. In your shoes, I’d be asking to be released from the contract with her as a buyer’s agent. I’d also ask for someone else (higher up, like the broker or more experienced agent) to review all the paperwork (so far and going forward) related to the sale of your present house to make sure you can “trust” the work she’s done for that transaction. 
 

We did once have a selling agent make an egregious error with a listing on one of the homes we sold. We went straight to the broker and had the listing contract voided; a contract can be voided if both parties agree to do so. Your position is a little dicier since you have the sale of the current home on the line, but your alternative is to report the real estate agent to your area Board of Realtors, through which she could be censured in some way. Agents and brokers do not want that to happen and may be more likely to answer your needs knowing you can take it up line. At the very least I’d want a careful review of all the paperwork involved for the sale of your current home. 
 

Sorry you’re dealing with all this. Buying and selling houses is among the more stressful life events, so many moving pieces to coordinate. 

[cintinative]

I am so, so sorry. I would have been so upset to find out I had been lied to by the seller about the liens, and that the realtor didn't check until this point, and that you are out all of that money.  

[Lecka]

I could be wrong — but to me, the current realtor wants the commission for the sale of your current home, surely she will be motivated?  
 

I think it’s too long to wait until Oct 15 if you would like to be looking in this time period.  If you wanted to take a break that would be different.  But I think it’s too long to wait around.  
 

And it would be better to start with someone as soon as possible if you know you want to switch, I would think.  

Edited September 16, 2023 by Lecka

[JustEm]

I can't believe that your realtor would let you just give $8000 to the seller.  How on earth did she not get that put into an escrow account.  I would be contacting the broker she works under and be pretty demanding in my expectation that they eat that cost by giving you the $8000 and having them go after the seller.

[Grace Hopper]

38 minutes ago, hjffkj said:

I can't believe that your realtor would let you just give $8000 to the seller.  How on earth did she not get that put into an escrow account.  I would be contacting the broker she works under and be pretty demanding in my expectation that they eat that cost by giving you the $8000 and having them go after the seller.

I guess I missed reading about this $8K when it happened (if op shared about it earlier). I’m also scratching my head that there was this direct payment to the seller prior to the actual home sale. 

[Annie G]

Was the $8000 payment part of the contingency? If it was, and she failed to complete the addendum, perhaps the agent/agency is on the hook for returning it to you. Not saying the seller isn’t committing fraud, but surely the agency has the equivalent of errors and omissions insurance to cover their own mistakes. 

[Anne]

I second moving up the chain of command to your current realtor’s broker.

I’m so sorry about all of this, Dawn!!!

[math teacher]

Your realtor should be embarrassed and not surprised for you to switch.

[BusyMom5]

8 hours ago, DawnM said:

No, the $10k was.   The $8k was given directly to the seller.

How did this even happen!!!!  Get a lawyer.  Your Agent is in big trouble and she probably knows it.  I'm betting behind closed doors they have discussed this, she may even be let go once this all settles.  

[Corraleno]

I would demand that your totally incompetent and unprofessional agent reduce her commission on the sale of your house by $8000 so you will not lose the deposit that she inexplicably handed over to a fraudulent seller! She also needs to let you out of the buyers agent contract immediately.

I would have a lawyer draft a letter to the broker listing all of the things she has totally screwed up and demanding those two things or you will see them in court.

Edited September 16, 2023 by Corraleno

[Grace Hopper]

1 minute ago, Corraleno said:

I would demand that your totally incompetent and unprofessional agent reduce her commission on the sale of your house by $8000 so you will not lose deposit that she inexplicably handed over to a fraudulent seller!

Absolutely. Recoup that from her and leave her to try to get it back due to her error. 
 

I’d bet at this point the agency’s lawyer has discovered the mess and will do whatever necessary to reduce losses in their part. Better get your own attorney’s eyes on it. 
 

One thing I’m wondering… in an earlier thread you mentioned your agent getting angry about you talking directly to the seller. If you did that, and it was related to this payment of $8K, that may diminish your ability to recover. But I realize I don’t know the whole story. 

[DawnM]

3 hours ago, Grace Hopper said:

Absolutely. Recoup that from her and leave her to try to get it back due to her error. 
 

I’d bet at this point the agency’s lawyer has discovered the mess and will do whatever necessary to reduce losses in their part. Better get your own attorney’s eyes on it. 
 

One thing I’m wondering… in an earlier thread you mentioned your agent getting angry about you talking directly to the seller. If you did that, and it was related to this payment of $8K, that may diminish your ability to recover. But I realize I don’t know the whole story. 

No, it wasn't about the $8k in any way.   

[DawnM]

8 hours ago, hjffkj said:

I can't believe that your realtor would let you just give $8000 to the seller.  How on earth did she not get that put into an escrow account.  I would be contacting the broker she works under and be pretty demanding in my expectation that they eat that cost by giving you the $8000 and having them go after the seller.

That is how it works here.   We got money from the buyers of our house directly.

[DawnM]

3 hours ago, BusyMom5 said:

How did this even happen!!!!  Get a lawyer.  Your Agent is in big trouble and she probably knows it.  I'm betting behind closed doors they have discussed this, she may even be let go once this all settles.  

 

3 hours ago, Corraleno said:

I would demand that your totally incompetent and unprofessional agent reduce her commission on the sale of your house by $8000 so you will not lose the deposit that she inexplicably handed over to a fraudulent seller! She also needs to let you out of the buyers agent contract immediately.

I would have a lawyer draft a letter to the broker listing all of the things she has totally screwed up and demanding those two things or you will see them in court.

My husband has contacted an attorney and we will be meeting with him sometime this week.

In the meantime, we will see what their lawyer finds out and what she can do.

She also failed to tell us that September 1st was a deadline for backing out without penalty (which is probably irrelevant now that all the other stuff has come out) but DH confronted her on that too, it is in none of the documents she gave us, and she happened to mention it when she came over, to which my husband asked her which document that was in and she realized she had never given it to us.

We have already asked her to release us from the buying contract and she has agreed.   She knows she messed up.

[JustEm]

1 hour ago, DawnM said:

That is how it works here.   We got money from the buyers of our house directly.

That is unbelievable 

[Corraleno]

2 hours ago, DawnM said:

That is how it works here.   We got money from the buyers of our house directly.

Is that how all agents do it in your state, or is that just how your totally incompetent and unprofessional agent handles it???  Because I have bought houses in 4 different states and 3 different countries and I have never ever heard of that. Everything I can find when googling "how is earnest money handled" says it's held in escrow. For example, from the Rocket Mortgage website:

"Earnest money protects the seller if the buyer backs out. It's typically around 1 – 3% of the sale price and is held in an escrow account until the deal is complete. The exact amount depends on what's customary in your market. If all goes smoothly, the earnest money is applied to the buyer's down payment or closing costs."

I have never ever heard of someone handing earnest money directly to a seller, for the seller to deposit — and potentially spend! — before the sale even goes through! That's crazy.

 

Edited September 17, 2023 by Corraleno

[mom31257]

@DawnM, I am so sorry this is all happening!!! I pray you can get it resolved easily and that the perfect house is out there and will be on the market when you are ready. 

[Grace Hopper]

1 hour ago, Corraleno said:

Is that how all agents do it in your state, or is that just how your totally incompetent and unprofessional agent handles it???  Because I have bought houses in 4 different states and 3 different countries and I have never ever heard of that. Everything I can find when googling "how is earnest money handled" says it's held in escrow. For example, from the Rocket Mortgage website:

"Earnest money protects the seller if the buyer backs out. It's typically around 1 – 3% of the sale price and is held in an escrow account until the deal is complete. The exact amount depends on what's customary in your market. If all goes smoothly, the earnest money is applied to the buyer's down payment or closing costs."

I have never ever heard of someone handing earnest money directly to a seller, for the seller to deposit — and potentially spend! — before the sale even goes through! That's crazy.

 

Likewise, having bought and sold near a dozen homes in 7 different states. I am having trouble understanding it. I mean, I believe what OP is saying but have never encountered anything like it in my own real estate transaction experiences. 
 

[DawnM]

6 hours ago, Corraleno said:

Is that how all agents do it in your state, or is that just how your totally incompetent and unprofessional agent handles it???  Because I have bought houses in 4 different states and 3 different countries and I have never ever heard of that. Everything I can find when googling "how is earnest money handled" says it's held in escrow. For example, from the Rocket Mortgage website:

"Earnest money protects the seller if the buyer backs out. It's typically around 1 – 3% of the sale price and is held in an escrow account until the deal is complete. The exact amount depends on what's customary in your market. If all goes smoothly, the earnest money is applied to the buyer's down payment or closing costs."

I have never ever heard of someone handing earnest money directly to a seller, for the seller to deposit — and potentially spend! — before the sale even goes through! That's crazy.

 

I think I got the terms wrong.   I paid money for earnest money that is still in escrow.   And I paid due diligence that went directly to the seller.   I think it is the due diligence that has been cashed.

[freesia]

4 hours ago, DawnM said:

I think I got the terms wrong.   I paid money for earnest money that is still in escrow.   And I paid due diligence that went directly to the seller.   I think it is the due diligence that has been cashed.

What is the due diligence money for? 

[Annie G]

Oh it was due diligence money! Is that refundable?  I thought it wasn’t. I also had no idea it was that much!  It feels like the hits keep coming for you. Ugh. 

[Grace Hopper]

The seller was the one who broke this contract due to having listed his home under fraudulent circumstances. You should be able to get the dd money back. But I’m guessing that’s gonna be a chore (like you might have to sue him for it). 

[Laura S.]

39 minutes ago, freesia said:

What is the due diligence money for? 

Unlurking, because my husband is a relatively new realtor in the state in question (I'm pretty sure) & I know the answer to this because I quizzed him a bunch on this stuff recently for licensing exams. I've also paid & been paid due diligence money in our own transactions that was cashed immediately.

Due Diligence money is basically to compensate the seller for taking the property off the market or pausing the marketing while the potential buyer investigates the property (inspections, perk tests for land, ect..) or otherwise tries to get things together to close the deal. It's generally not refundable because it's paying the seller for their time & potential lost opportunities to sell to others which occurs even if the sale doesn't close. I believe It can be refundable if the seller materially breaches the contract, but that would be quite unusual.

Saying purely as my non-licensed self though, I would think that you could make the argument that since the seller was apparently never able to sell the property in its current situation (If I understand correctly), he actually lost nothing by taking it off the market & therefore doesn't need to be compensated for that time. Since the seller has breached the contract, by being unable to sell, it would seem arguable that the due diligence could be refunded because he didn’t actually provide the time to close the deal that the due diligence paid for even if he appeared to. Having said that, if this guy has long spent the money & is in as much financial trouble as it seems, getting it back might be like getting blood from a stone as a practical matter & may not make a legal fight cost effective.

I would massively second the advice up thread to try to talk to the buying agent's broker/ supervising agent, who should be better positioned to try to unravel what might be possible in this unusual circumstance. I'm kind of baffled they haven't stepped in already, but maybe this agent is much further along than my husband while still being "new" or is doing so behind the scenes.

(enter boiler plate "This is not real estate or legal advice" 🙂 )

[DawnM]

36 minutes ago, Laura S. said:

Unlurking, because my husband is a relatively new realtor in the state in question (I'm pretty sure) & I know the answer to this because I quizzed him a bunch on this stuff recently for licensing exams. I've also paid & been paid due diligence money in our own transactions that was cashed immediately.

Due Diligence money is basically to compensate the seller for taking the property off the market or pausing the marketing while the potential buyer investigates the property (inspections, perk tests for land, ect..) or otherwise tries to get things together to close the deal. It's generally not refundable because it's paying the seller for their time & potential lost opportunities to sell to others which occurs even if the sale doesn't close. I believe It can be refundable if the seller materially breaches the contract, but that would be quite unusual.

Saying purely as my non-licensed self though, I would think that you could make the argument that since the seller was apparently never able to sell the property in its current situation (If I understand correctly), he actually lost nothing by taking it off the market & therefore doesn't need to be compensated for that time. Since the seller has breached the contract, by being unable to sell, it would seem arguable that the due diligence could be refunded because he didn’t actually provide the time to close the deal that the due diligence paid for even if he appeared to. Having said that, if this guy has long spent the money & is in as much financial trouble as it seems, getting it back might be like getting blood from a stone as a practical matter & may not make a legal fight cost effective.

I would massively second the advice up thread to try to talk to the buying agent's broker/ supervising agent, who should be better positioned to try to unravel what might be possible in this unusual circumstance. I'm kind of baffled they haven't stepped in already, but maybe this agent is much further along than my husband while still being "new" or is doing so behind the scenes.

(enter boiler plate "This is not real estate or legal advice" 🙂 )

They are advising her and the attorney for the firm has stepped in.   However, I really dont' know who her "boss" is since they are essentially free agents?   Do you know?

We will meet with an attorney this week (our own) and then when our house actually sells completely, we will most likely call the state licensing board and turn her in.   Not to mention the review we will be leaving.   But again, we just want to get through the sale first.

We close on the next door property on Wed or Thur of this week.   That is what the buyers of our house are waiting for before they give us the rest of the DD.   

Then they have until the 29th to negotiate repairs and/or credits for repairs.   We should have a much better picture of everything by then in terms of the sale going through, how much we have to buy another house, etc....

 

Edited September 17, 2023 by DawnM

[HomeAgain]

13 hours ago, Corraleno said:

Is that how all agents do it in your state, or is that just how your totally incompetent and unprofessional agent handles it???  Because I have bought houses in 4 different states and 3 different countries and I have never ever heard of that. Everything I can find when googling "how is earnest money handled" says it's held in escrow. For example, from the Rocket Mortgage website:

"Earnest money protects the seller if the buyer backs out. It's typically around 1 – 3% of the sale price and is held in an escrow account until the deal is complete. The exact amount depends on what's customary in your market. If all goes smoothly, the earnest money is applied to the buyer's down payment or closing costs."

I have never ever heard of someone handing earnest money directly to a seller, for the seller to deposit — and potentially spend! — before the sale even goes through! That's crazy.

 

This is new to me.

When we sold our house I was handed the earnest money directly, in cash, within the first week or so of finalizing.  It made me uncomfortable to have until the sale was final so I just tucked it into savings, just in case.  I thought it was weird but it was the only time I'd sold a house and didn't know what to expect from that end.