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I'm selling my home in Northern California. Got an offer and I immediately suspected the buyer was a flake. I searched their name on the internet and found he was in some "marketing" business that seemed real flaky to me.
I expressed this to my agent and was reluctant to sign the offer. I wanted "bank approval" My agent assured me they were "strong buyers" and they were placing "$50,000 as a down payment. Had anyone actually seen this down payment? NO!, but hey, those buyers wrote it down and told the bank that would be their down. In the meantime, the agent took my home off the market.
Two weeks go by and at my growing concern for request that the buyers be approved, my agent FINALLY demands we get something from the bank. In comes, a fax, with no bank officer's name, no details, just a one page "commitment letter." What the hell is that I ask? What good is it? Again, my agent said all would be fine. A commitment letter, as it turns out is a nice gesture from a bank that basically says, a buyer stopped in and said HI TO ME! It's worthless as nothing has really been verified!
Everything is going forward and I move from my home, place all my stuff into a large storage facility and write up an offer on my new home. I am now 5 days from closing. The buyer and I were still haggling out a few MINOR inspection details, I agreed to all their requests, everything on the report and had it all done. They just needed to sign it.
Well, as you guessed, the underwriter took a 5 minute look at these fine people and DENIED their loan. Turns out the buyers were in some borderline scam multi-level marketing business. DENIED!
Just as I knew would happen all along. So, the buyers who were yet to sign off on final approval of the negotiating of the inspection report despite being only five days out, got a full earnest money refund because they "did not approve of the inspection findings." BS!! And to boot, they demanded I pay for the inspection! I told them to sue me, not a chance.
Moral of the story? Realtors are all about stats and generally do not give a rat's behind about you. It's all about making themselves look good. I told my agent all along I did not feel good about these con artists and we needed to check them out and demand financial approval. But ooooohhhhh no, she knew best!
Needless to say, my home is now once again being sold, only this time, by myself. And I put right in the ad, that no offer will even be looked out without financial approval! My homes is priced $40,000 below market and will sell quick. Why should I pay an agent $18,800 to write and ad and screw the deal up?
Why realtors think they are so damn important is beyond my comprehension.
While I empathize with your situation, not all realtors are bad so it is not fair to generalize them as such. Yes, your realtor should have advised you not to accept the offer without a pre-approval letter, but con-artists are exactly that....they could have easily copied/downloaded a banks logo/letterhead and typed the letter themselves. You nor your realtor would have been none the wiser unless you called the bank right away to verify. Unfortunate?......yes, but in many business transactions there is a good faith element that all parties rely on....you just happened to have dishonest "potential" buyer.
OMG I'm so sorry that happened to you! I see many listings now where it states buyer must have proof fo funds before placing an offer but I'm looking out of state so I don't know what the norm is here. I think you had a crappy real estate agent but I think there are many who would have been more in your court and understood your conscerns. If the sale is lost they don't get a commission either do they?
I just sold a property myself to a PITA buyer so there's no guarantees there either.
I see lots of errors, but the one that stands out - why would you agree to take your home off the market when you got an offer?
I don't understand why the realtor did that either because I've called on lot's of properties that are pending sale but they don't take them off till it's a done deal.
I have an offer in on a house and it's still listed for sale because while we've got intent and earnest money down, we haven't closed and anything can happen from point A to B.
Sorry this happened to you. You could and should have insisted that she double-check the buyers, and you could and should have not signed anything that involves shaky people. It's not like a few years ago, when buyers involved in multi-level schemes and scams could obtain a mortgage fairly easily. She should be very aware of that. Once you got wind that the buyer was involved in something shaky, the agent should have asked for all kinds of proof that can be easily confirmed/verified. It's like she was representing the buyer's interests instead of yours.
I see lots of errors, but the one that stands out - why would you agree to take your home off the market when you got an offer?
Homes under contract ( subject to home inspection and buyer financing) are not active listings. They usually cannot continue to be shown per the terms of the contract. Home sale/close contingencies are the exceptions.
Buyers are routinely responsible for the cost of the home inspection, including radon and pest. Some contracts require the seller to be responsible for septic and well inspection, if applicable. Contracts and local customs vary.
Perhaps the better question is why accept an offer without the buyersbeing pre-approved ( as in income/assets verified), in the first place.
In this case, it appears the lender issued a commitment letter. The devil is often in the fine print.....initial commitments are contingent upon other factors, minimally including:
Appraisal
Clean Title
Proof that buyers have funds to close
Approval by underwriting
Reading between the lines here, it seems there may be more to this story...
Assuming this contract was contingent upon buyer financing, as almost all but cash sale contracts are, there would be no need for the buyers to " not approve" the work done relative to home inspection issues. If a buyer cannot obtain financing, they get their earnest monies back. In any event, asking the seller to pay for the home inspection is out of line, unless the seller defaulted on the terms of the contract.
I am curious about the so-called "borderline scam multi-level marketing business". This sounds more like the OP's assessment of the situation as opposed to anything concrete.
Last edited by middle-aged mom; 08-27-2009 at 11:58 AM..
Well in defense of realtors, mine kept insisting I submit my pre-approval letters with all of my offers, even those that didn't require it like the REO's do. I was getting frustrated knowing that they weren't going to accept my offer anyway and each time I got a new pre-approval letter (I've been looking a LONG time ) they would run my credit report and potentially hurt my FICO score. I was reluctant to keep updating my pre-approval letter but my realtor insisted so I did as I was told. Not all realtors should be depicted as you describe them. Many are very conscientious.
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) they would run my credit report and potentially hurt my FICO score. I was reluctant to keep updating my pre-approval letter but my realtor insisted so I did as I was told. Not all realtors should be depicted as you describe them. Many are very conscientious.
