Need advice: buyers backed out on sale days before closing (real estate, rental)

[snrdos]

I'm no real estate mogul, and I may just be out of luck, but here's how it goes:

Our house has been on the market for about a year. We had a 'buyer' who had looked at the house 3 times and finally made an offer. We came to a contract, but they needed to close in 3 weeks. A little rough with a 7-month-pregnant wife, but we made it happen.

Meanwhile we found the house of our dreams, after a year of looking. We negotiated a contract on it (contingent upon successfully closing on our current home,) and set a close date that left us with about a month of homelessness. A little rough, but workable. We paid for a home inspection, and had everything lined up and a close date.

Friday (less than a week until we are set to close,) the buyers want to take some measurements...I'm easy, not a problem. I assumed for drapes.

Well...they are coming up with about a 90 square ft. discrepancy from the MLS listing and are wanting to renegotiate. I'm upset by this because we are already packed up...stuff scattered to the wind, loaded in PODs and self-storage. Our house is empty. We're sleeping on the floor. They have us over a barrel, so I concede to their demand for a discount. Instead, they now want to walk away from the contract.



Now I have an empty house, a boo-hooing wife, time lost from work, expenses incurred from PODS and storage, and they don't think that they are on the hook for even the $1k earnest money.

Is there any recourse? Anyone know a good real estate lawyer in town? My life is upside-down right now over this. Best to just suck it up and move on? I'm already out more than the $1k just in cash.

[bbkaren]

Seems to me like if you conceded to their discount they'd be bound to close. But I'm not RE attorney either. Don't you have one? I don't know how it works down there...

Here in NJ if you back out after attorney review (I think) you lose your deposit, plus I believe the other party does have recourse against you.

I think it really stinks they did this to you, and I hope you're able to work it out. But I'd say an attorney is going to be the only one who can really give you good advice.

Good luck!

[virgo]

I stumbled onto your post. Sorry to hear of your troubles.

Not sure if you specifically wanted input from the TN board only, but there is also a "Real Estate Profession Board" under General Forums. Maybe some of the guys and gals there could give you some feedback as well. Good luck to you!

[snrdos]

Thanks all. We had an open house today...had to take some kind of positive action, just to get our minds off of it.

[goodbyehollywood]

Wow, that's awful! I don't practice law, but I used to get transferred every year, so I've bought and sold a lot of houses. The good news is, a contract is legally binding, and if the buyers back out, they're liable for damages (so keep track). The bad news is, they still might do it and you'll have to track them down and sue them, which is no fun. But putting your house back on the market and being stuck in between two properties is no fun, either. As long as you haven't released the buyers from their obligation, they are still on the hook. (And most contracts have disclaimers for minor square footage discrepancies, so unless you knowingly concealed, this shouldn't be an automatic out.)

FWIW, my advice is to get your RE agent all over this and have her/him tell the buyers that you are willing to take legal action against them if they fail to perform as agreed. If they're claiming a "fail to disclose" or something similar, you could call a RE attorney and get a free consultation. The buyers might be on the fence and you can rein them back in, if they know you mean business.

Again, I'm not an attorney, but I did have a seller bail last-minute on me once, so I know what you're going through. Good luck!

[snrdos]

From what I understand, buyers can walk the day of closing for any reason and they're just out their earnest money.

Am I off on this? What's good is a contract in the first place?

[agreeableone]

Good Gosh! Measured with what a yardstick or tape measure. Where I live, the square footage of living space is in the county records and public. Isn't that one reason they make us do title searches and appraisals when getting a mortgage.

Your predicerment is awful and a lesson to us all. Until you close and have the money, don't spend the money you do not have. I would follow the directions given above. Go after the agent who supposedly is working for you and has a financial interest in getting the buyer to follow through. He/she can recommend a lawyer, if you haven't found one already. Get a lawyer Monday morning.

Be prepared to move back in your home. At least you are not on the hook for the new home. (Get the lawyer to make sure of that because now you will be the one making someone unhappy even through no fault of your own).

I understand that it is almost impossible to make someone fulfil a real estate contract. What if the reason is that they are simply big BSers and have no money or no credit? It has happened before with variations, but amounting to the same. Usually, the seller hasn't gone so far out on a limb, but you do know how much time, cost and effort it will be to recover from this jerk.


Good luck and remember what my late/wonderful wife always said, (in Spanish so I probably am not translating it well) God might take away something, just to give you something better). It is true, in my experience. Let God, Let Go.

[agreeableone]

Originally Posted by snrdos

From what I understand, buyers can walk the day of closing for any reason and they're just out their earnest money.

Am I off on this? What's good is a contract in the first place?

I am not a lawyer, either. That is why you need a lawyer. Preferably at the closing, but if not, waiting at the phone.

Not to make you feel bad, but didn't your real estate agent give you any advice? That business of closing in three weeks sounds fishy to me. Was a credit report done on the buyer? Did they have a mortgage available to be used on your house, specifically? Was there a survey and title check done by SOMEONE?

The good advise is not to sell or buy without a real estate agent or, in some cases a real estate lawyer.

This experience will at least be educational to you and hopefully others, although now it is just painful.

Personally, I feel you should be ready to move back in and make a home for your wife and new baby on the way. Unless, of course, the tide changes tomorrow or very soon afterwards.

There will be more buyers and lots of dream homes on the market too.

[goodbyehollywood]

Again, I'm not a lawyer, but I know this for a fact: a real estate contract is legally binding and you must have a justifiable reason to walk at any time, once the contract has been signed by both parties. Once it is signed, it is legally enforceable and both parties must honor the terms.

Now, I'm sure your buyers had "weasel clauses" for a home inspection, financing and possibly other things, so maybe they're using one of those to wiggle out. But those are generally good for 10-14 days, so it all depends on the wording in your contract. Your RE agent should have made sure it was airtight in this slowing market.

The most important thing is for you to get legal advice from a reputable local attorney ASAP, tomorrow, first thing. Call the TN Bar Association and get a referral, if your RE agent can't get one for you. There must be some reason your buyers are confident about walking, so you must have a loophole in the contract.

I once had a seller back out a week before closing, which was catastrophic for me, because I had a buyer for my own house and they wouldn't budge on the contract. Like you, I was caught in the middle, so I had to go ahead and sell my house to the buyers and take a temporary rental until I could find someplace else to go. The seller was in breach of contract and I collected damages. But I had a good agent and a good attorney, who made sure I was made financially whole, though mightily inconvenienced and very frustrated. Taking legal action is a huge hassle, especially if you can find another buyer.

Call an attorney and let him/her figure out what's best for you, so you can move on, one way or the other. Hope it all works out!

[snrdos]

I'll start working on it this morning. I had a letter of approval to purchase the property from the buyers' lending institution. Everything was negotiated and as airtight as it gets. The only thing in dispute is about 90 sq ft on a ~2400 sq ft house.

You could measure 10 times and get 10 different figures. There are lots of angles in our house.

The bite in this whole deal is that we found the house that WE want, after over a year of looking. But the other property is very desirable and I wouldn't be surprised if they have another contract on it in a day or two.