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Ive heard of agents continuing to show a house after the contract is struck, but that is so that they have potential buyers in place in case the buyer's credit falls through. Its NOT intended on being a strategy for fishing the market for the best offer. That flies in the face of the principle of signing a contract; to lock in an offer. But this is Chicago......
And, a real impetus for a seller to solicit back up offers is that a nice back up contract may give a seller the confidence to negotiate harder and to refuse excessive demands from the primary buyer.
Well, it certainly sounds like a shady deal -- so the question is, why would you want to continue doing business with these people, seller and agent alike? I'd count it as a great gift and sign that you just narrowly missed a whole lotta crapola being thrown around for the next month.
Now, if this is your dream home and you have your heart set on it, it sounds, from the cheap seats, that you have a valid contract. A seller can't "unilaterally" void a contract if there are no terms that are "voidable" -- i.e., if the contract wasn't legally binding for some reason. You can sue for performance ($$) or your broker can call his broker and have a heart-to-heart over what they can and can't do on a deal like this.
Yes, it would bother the daylights out of me, but in the long run, it's generally a miserable experience to drag a seller to the closing table. Tell them if they want out of the contract, it's going to cost them . . . triple the earnest money for you to walk away. There should be some compensation for your time and trouble in dealing with a seller who was not ready and willing to sell.
It's also illegal to continue showing the home after a contract is signed, let alone accept offers. His responsibility as an agent is to tell the sellers that he legally cannot continue showing the home while under contract and recommend they finish the legal review process.
While I don't know IL real estate law/practices, so I may be way off base here ... I've never heard of it being "illegal to continue showing the home after a contract is signed".
In all the states I've bought/sold real estate in, and in the state I was a licensed agent ...
It's common practice to continue to show a house and accept offers even after a contract has been accepted and signed.
Reason: until a closing takes place and good funds have exchanged hands, there can be a lot of contingencies which can prevent a deal from closing, even with a specific performance contract.
It's a good practice on the part of the seller's agents to solicit and accept back-up offers for their clients in case the first deal falls through.
OP, unless you've suffered significant monetary damages or can prove via the need for psychiatric treatment received due to the failure of this purchase, you've got a tough road ahead trying to get even with that agent. IMO, you'd be far better ahead in your life to move on. I, too, am a manufacturer's rep and I see good sales folk and sloppy/unethical ones in the course of doing business. I've even been screwed over by manufacturers for earned commissions, even found out it was part of their sales model to hire reps and then short them, taking over the accounts the reps had established. None of these situations ever justified my time/expense or personal energy to pursue damages or penalties against those folk. I suspect that you're in the same situation now ... you will likely cause more damage to yourself than you'll ever inflict upon the agent that you think messed up this deal for you. Most likely you'll do best to save your energy for moving forward to the next possible deal ... and they're all only "possible(s)" until you can bring one to the closing table.
You, too, may find yourself in the "back-up contract" position for a real estate deal someday. Might be worth it, might not. But if you want a place, you've got to do what is necessary to complete the deal in the seller's market you describe.
On a personal note, I've had the 5th contract in line for a property and watched all the deals ahead of mine fall through in the space of a few months. I was the first buyer in the sequence that was capable of completing the deal and did so. IF I hadn't been able to close it, the next buyer would have had his chance ... and there were a couple more behind him. It was clearly to the seller's benefit (and mine, too) to have the back up showings and contract offers accepted. It was a great deal for me and a resolution to the seller's divorce settlement in a timely manner ... a commercial equine property for which a lot of interest was generated in the marketplace but few buyers capable of coming up with the 40% down needed to get commercial financing once the lenders realized the property wasn't a purely residential deal. If there was any misrepresentation by the seller's agents, it was listing the property as a residential parcel rather than as the commercial property with a residence on it which the zoning clearly defined. IMO, the agents screwed themselves by showing the property to so many residential buyers who could not possibly qualify for the commercial loan needed to buy the place.
It costs me nothing to report this agent to associations, licensing agencies, and his employer for his behavior. If I did the same thing in my job I'd be fired instantly. I'll gladly take steps to ruin this guys career.
From looking at the data in my own state it would seem nothing short of an agent egregiously flaunting the law in public will result in anything more than a very minor slap on the wrist.
It makes no sense to sign a contract and then do a legal review of the contract. Here in NY, you usually agree to go into contract. Have attorneys on each side review the contract. If everyone is happy with the contract, you sign it and put some earnest money down to take the property of the market. Seems backwards in Chicago.
In some parts of the country, there are Title Companies that issue title commitments, and there are parts of the country where they use attorneys to review the title prior to sale. The review is to evaluate the title of the property, and the contract will be subject to the title being clear and transferable.
It is not against the law for a Property be shown after a contract, and for buyers to make back up contracts that are only good, if the first contract should fail for any reason. However the first contract is the one in effect, until for one reason or another and it will close unless the buyer is unable to close on the sale. This is known as a back up contract, and is quite common. If the first contract goes to closing, then any and all back up contracts are void and deposits returned to the back up buyers.
What has happened in this case, is the seller wants to take a higher priced back up contract and kick out the first buyer. This has happened many times around the country. The thing is, as long as the first contract is in effect, and the steps are being properly taken, the first contract is in effect, no matter what.
The buyer can take steps to force the seller to perform on the contract, and the first buyer can buy the property.
I have seen this happen, and my own son had this happen to him in another state. He called me for help and I advised him what I was taught in real estate law classes at a major university.
He filed the contract he had at the county court house, and this puts a lien on the property, and no one else would be able to buy the property for one year, waiting for official law suite to enforce the contract. He sent a certified letter with return receipt to the Broker of the sellers real estate listing, a copy to the seller, and to his own selling agent notifying them that he was going to take any steps necessary to enforce the contract (legal jargon for sue the seller to enforce the contract to close).
This meant that no one could sell the property to anyone but the one with the first contract for a year or until a court ordered the sale to go through. The seller wanted to sell, and my son's contract closed on time as he did not want to wait a year, and have to pay attorney fees if he was sued to enforce the contract.
Also in the same latter to the listing office, notify them if it is not closed on time, that you are making an official complaint against them to two places. The state association of Realtors if they are a Realtor, and to the agency that controls licensing real estate offices and agents. This is a serious charge, and can even go as far as causing the agency and agent to both lose their real estate licenses.
Don't do this, unless you know you will be able to close on the sale, with financing available, etc. But if you know you can close, dropping this on a seller and agency is like dropping an atomic bomb. I have seen it work around the country at different places. The original buyer, ended up with the property every time.
Having a seller and agency try to get out of one contract and take a higher priced contract, is far from unknown, and sometimes those sellers and agents have to be taught a lesson. If they run to an attorney when they get the latter, the attorney says you have a contract and you can be forced to close.
Just an idea from a retired Commercial Real Estate Broker, that has seen sellers and their agents try to kill a sale and take a higher price many times over the last 4 decades since he want into the business. Some agents will go along with a seller on things like this, but good agents will explain to the seller that a contract is in effect, and until the contract fails they are bound by law to close on that first contract.
We had a similar thing. The sellers (a real estate agent who owned the house) dragged their feet and kept extending hoping we would go away because property was going through a big increase at the time. A trip to the attorney and the letter and we closed within a week.
As OldTrader said, recording the Contract is an excellent "threat" - and it does not require a lawyer to record. Just head on down to the county/city/town hall/Recorder's office and pay a couple dollars per page. I am surprised the OP's buyers agent hasn't suggested this.
Yeah, I'm sure it varies. In Illinois my lawyer told me they can't show the property or take offers.
Once they sell the property it will be public knowledge and the sale price, it's it's higher than what we agreed on we'll have our evidence to file actions against them.
Is your lawyer an experienced real estate attorney? If so, and if you have a binding, enforceable contract, I'm curious as to why you would delay taking legal action, if that's what you choose to do. Either you have a binding contract, or you don't. (They simply can't "void" a contract unless there is a specific provision in the contract which allows them to do so.)
The crux of the matter is the "legal review" period in your contract. How is that defined...and is it for a narrow purpose or for a general legal review? If, under the terms of your contract, they can back out subsequent to a review of the contract by their attorney, you really have no case. You only have cause to be upset. However, if it's narrowly defined, or if it's not even extended to the Seller, then you may have a case for specific performance.
If you have a binding contract--and if you really want the house and are able to go through with the purchase--then I fail to see any advantage in waiting to take action. If you've moved on and are just looking to make life miserable for the other side...then I think you need to rethink your priorities. Maybe this is a blessing in disguise.
Last edited by jackmichigan; 05-29-2015 at 07:12 PM..
Old trader, that was a very interesting read. I think I can recall hearing of recording a contract with the clerk of court back when I took the original licensing course but it was in contrast to what is done in Florida. Our usual association contract specifically prohibits the recording of the contract or any notice of it. Interesting how things are done differently around the states.
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