Where do we stand? Our buyers backed our and we are told we wont get earnest money! (sale) - City-Data Forum

mrgan7071 · 06-22-2009, 03:00 PM

I have a problem with a contract that we had on our home. We are selling our home. We had a couple put a contract in 'contingent on the settlement' of their property. This was NOT 'contingent on the sale' of their property. After 3 weeks, we contacted our realtor, who is also the realtor for the ones buying our home and asked about progress. Come to find out, these folks had told our realtor that they had a buyer for their home (they are selling it on their own), but now that buyer has found that their house isn't worth what the people were asking so they have backed out. Our realtor had told us that the couple had all financing approved for the purchase of our home. Now we are finding out that the financing was only approved by the bank if their home sold. Our realtor has already admitted that he dropped the ball in this transaction and he should have had solid proof that the buying couple had a contract on their home, which he did not.

My question.... we are being told that we do not get the $500 earnest money from the contract that the buyer is backing out on for several different reasons, which the reason seems to change every time we talk to the realtor.

What is our standing here? We feel as though these buyers signed a contract on our house under false pretenses and that since they put $500 down to make their deal legitimate, then we as the sellers (who have lost over 3 weeks of prime market time in showing our home) should be well entitled to this earnest money. The buyers are the ones that are not able to close the deal on the 24th. What gives here? We had already started moving stuff out, rented a storage unit and found another place to live by the time anyone told us of the offer falling through. Who is responsible to us for this $500???

chet everett · 06-22-2009, 03:14 PM

A contingency that it poorly written is still a contingency. If you agreed to the vague contingency of "settlement" of the buyers existing house it is very likely that there is little hope that a judge would not agree that the buyers house did not close and therefore they cannot be compelled to forfeit the earnest money.

BTW $500 earnest money is too small -- really not worth higher a lawyer over. If the earnest money is higher it sorta makes more sense to work harder to get things done right...

linicx · 06-22-2009, 04:55 PM

Been there, done that. I would say you are out of luck. Chalk it up to one of life's little lessons and go to plan B. This what happens when you get a realtor who represents both buyer and seller and allows you get into a three way house deal - which normally falls apart.anyway.

There is no prime seller's market now. It's a buyers market. While it is true the better time to sell is between the end of may and the first of September, buyers buy all year and houses sell all year.

You are faced with a real mess. Your house deal fell through and the broker is incompetent. He failed to do the very first thing he should have done before he presented the offer for you to sign.
You are stuck with this guy to the end of the Listng Agreement.

You can do one of three things. A - Hire an attorney and do not sign any other buyers contract your attorney does not read and approve. B - Write a littler to the owner of this company and demand your house be REMOVED from MLS and taken OFF THE market NOW. YOu will probably get a Conditional Release that means you are still under contract to this company until the Listing Agreement expires. In my case I was hung up on a 1 year LA. C- Accept NO offer the company presents. D. Wait until the contract exires and find a new broker.

IF you do the latter, look for the oldest established company in your city. MOst of the pre-approved loans have a caveat just like what you rant into. VA loans normally take longer to close than a standard home loan. A good loan can close in two weeks or less. The normal close is 30 days. Government loans can range from 30-120 days.

- Refuse and all offers the broker brings.

Mathguy · 06-23-2009, 07:50 AM

Just move on.

This happened to me about 10 years ago and we re-sold a week later for a little more money. lol.

When it happened to us, my realtor basically said that if we got anal about not letting them keep their earnest money that they could dispute it and tie up the sale of our house to someone else while it resolved (something like this, it was a while ago). Basically we could pee in each others lemonade and no one would win or we could move on.

doll lady · 06-23-2009, 01:03 PM

I really think I would write a letter of complaint to Lisa Madigan's office and directing the complaint against the realtor...I think you have grounds to break your contract with him and after this type of thing I wouldn't want him selling my house.....I would also send a copy to the Illinois Department of Financial and Professional Regulation.....I used to hold a realtor license and he resresents you first, then the other people .... I have seem licenses pulled for these type of reasons.

sgresident · 06-23-2009, 04:15 PM

you should get to keep the earnest money. and I agree with previous poster..your earnest money is too low. plus, you should not do real estate transactions without an attorney.

Prairie · 06-23-2009, 04:46 PM

Really good advice has been given to you, if all else fails take it to small claims court.

AnimalLover · 06-25-2009, 11:21 PM

A contingency on the closing or 'settlement' of the buyers property is not unusual. In fact, I would higly recommend it if the buyers were my client. Having a contract in force to sell the other property doesn't not necessarily mean it will close on time (or ever for that matter). These days it seems whatever can go wrong, will.

Getting to the closing table is becoming more and more difficult. Between new rules, bank mergers, HVCC requirements - we have had many delayed closings, deals falling through over appraisal, financing, FHA requirements, etc etc etc. I had a closing today - received the settlement statement minutes before closing - the sellers didn't see it until they were at the closing. This particular bank is doing the final underwriting a few hours before closing - by a department located in another state. Calls are not returned, information is not available - it's very frustrating and something we have NO control over. There are new rules that go into effect at the end of July that will further hamper the process. The intent is good - the end result will likely cause additional delays and failed closings.

I'm sure it's been a frustrating situation for you, and you're wiser for it. Keep this in mind when you receive another offer on your home - you may not want to accept it if there's a contingency on selling or closing on another property. Of course that will also limit the pool of buyers that are able & willing to purchase your home. Anyone purchasing a home should consider having a contingency in that contract to protect them (and their earnest $) if the sale of their current home falls through.