Is this Fraud? (contingent, documentation, 7%, negotiating)
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Trying to sell our home. House was on the market for two weeks, and we were presented with an offer.
Offer was contingent (sale of home) for quite a bit less than we were asking. We countered back and forth twice when we received a second offer.
Second offer was non-contingent for even less than the first. Because you can only counter one offer at a time, we continued negotiating on first offer.
Realtor for second offer call repeatedly asking "why aren't your sellers countering our offer"? To which our realtor replied, "we have another offer and we are in the countering process, and frankly you offer was considerably lower as far as selling price than the offer we are currently engaged with". If your buyer is serious, I would suggest they make a serious offer".
BY this time offer number one was losing steam, as the buyer was not moving closer to our number, that's when offer two's second offer came in.
Their offer was for the number we were trying to reach with offer number one, non-contingent, 20% down - conventional loan.
We rejected offer one's last counter, and accepted second offer from offer two, and requested pre-qual documentation for their loan. This is where things turn sour.
Realtor for offer number two for five days claims "my buyers can afford the house, they are pre-qualified...I've seen the letter". Everyday for 5 days we ask our realtor to get the pre-qual documentation.
On the fifth day we get an addendum to the contract that they are now changing their loan from 20% down - conventional to VA loan and they are putting 7% down. Obviously that is not what we agreed to.
On the sixth day we receive a pre-qual letter from buyer through Quicken loans for a VA loan 7% down. Although the letter had that day's date June 9th, it the fine print it was clearly granted on May 2, 2011 and that it was good for 90 days from May 2nd, 2011.
Our contention is that the buyer and buyer's realtor colluded to submit an offer with a 20% conventional mortgage knowing that was NOT the mortgage the buyer was seeking knowing that we would not accept an offer of a VA loan with only 7% down.
By doing so they made sure we disengaged with the first offer.
Although they may have never intended to go conventional, I doubt you can take any legal action. However, should consult with an attorney if that's what you want to do. Your option was to reject the addendum to change the loan and possibly cancel the contact if they could not stick to the original terms.
Anyway, what's your concern about a VA loan/ 7% down. If they are qualified, does it matter?
They clearly are not qualified to buy the house, and have not produced anything to prove that they can.
I lost the ability to negotiate with the first party.
There were two other parties interested, but since the house appeared in the paper as sold this past week, they and any other interested parties are gone as well.
The buyer and their agent clearly misrepresented their position in the offer, had they written the offer with VA, and basically no money down we would NEVER had accepted the offer.
Trying to sell our home. House was on the market for two weeks, and we were presented with an offer.
Offer was contingent (sale of home) for quite a bit less than we were asking. We countered back and forth twice when we received a second offer.
First mistake was negotiating with this buyer who could not buy unless selling his home. Contracts contingent on the sale of buyers' homes in this market are not advisable.
Second offer was non-contingent for even less than the first. Because you can only counter one offer at a time, we continued negotiating on first offer.
Second mkistake: You should have rejected offer #1 and worked with offer #2, a real buyer, all you had to negotiate was price if he was qualified.
Realtor for second offer call repeatedly asking "why aren't your sellers countering our offer"? To which our realtor replied, "we have another offer and we are in the countering process, and frankly you offer was considerably lower as far as selling price than the offer we are currently engaged with". If your buyer is serious, I would suggest they make a serious offer".
Your Realtor was wrong. Buyer #1 was not qualified to buy at any price until selling his home. You took a chance on losing buyer #2.
BY this time offer number one was losing steam, as the buyer was not moving closer to our number, that's when offer two's second offer came in.
Their offer was for the number we were trying to reach with offer number one, non-contingent, 20% down - conventional loan.
We rejected offer one's last counter, and accepted second offer from offer two, and requested pre-qual documentation for their loan. This is where things turn sour.
Realtor for offer number two for five days claims "my buyers can afford the house, they are pre-qualified...I've seen the letter". Everyday for 5 days we ask our realtor to get the pre-qual documentation.
On the fifth day we get an addendum to the contract that they are now changing their loan from 20% down - conventional to VA loan and they are putting 7% down. Obviously that is not what we agreed to.
As long as your buyer is qualified, what's the problem. You cannot demand they get a loan that suits you. It only has to suit the bank. If the Realtor has a pre qual letter, that's all it is, pre-qual. Not pre-approval. The buyer has to apply for the loan, get approval etc. etc. I don't see how you can say the buyer is not qualified.
On the sixth day we receive a pre-qual letter from buyer through Quicken loans for a VA loan 7% down. Although the letter had that day's date June 9th, it the fine print it was clearly granted on May 2, 2011 and that it was good for 90 days from May 2nd, 2011.
No problem,, your buyer was pre qualified for that loan. Buyers should qualifiy for the most mortgage possible, any less of a mortgage is in their favor. I'd rather have a buyer qualify for 7% down and decide to put 20% down later on. They just wanted "leeway". No big deal if they are qualified.
Our contention is that the buyer and buyer's realtor colluded to submit an offer with a 20% conventional mortgage knowing that was NOT the mortgage the buyer was seeking knowing that we would not accept an offer of a VA loan with only 7% down.
By doing so they made sure we disengaged with the first offer.
Noooo.... there was no collusion, buyer #2 did not know what buyer #1's terms were. And based on your statement, there were 2 Realtors involved. One on the first offer, and one on the second offer. No one knew what the second offer was, and no one "made" you disengage the first offer. It was not a good offer to begin with. Your first offer was not worth the paper it was written on if contingent on someone selling another house.
Any guidance and opinions would be appreciated.
Thanks in advance.
You have a "sale pending", and depending on the laws in your state, you are free to accept a strong backup offer if you can get one.
No problem. Don't borrow trouble; and don't be litigious. If you want an attorney's advice, have an attorney look at your agreement. Be thankful you have a decent buyer within a 2 weeks period, and not in 2 years in this market.
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You still have the house, so you are not damaged. My opinion from an NC perspective.
Next time, get the preapproval prior to counteroffering, and definitely prior to going to contract.
An offer without a preapproval letter is an incomplete offer.
I understand your concerns and I agree with the comments already made. Your one and only goal should be to get your property sold and, even with your concerns, it appears that you are well on your way to making your goal a reality. Ask your agent to stay on them like white on rice so nothing else goes wrong but keep focused on the positive.
They clearly are not qualified to buy the house, and have not produced anything to prove that they can.
I lost the ability to negotiate with the first party.
There were two other parties interested, but since the house appeared in the paper as sold this past week, they and any other interested parties are gone as well.
The buyer and their agent clearly misrepresented their position in the offer, had they written the offer with VA, and basically no money down we would NEVER had accepted the offer.
In the OP you said they have a pre-qual letter and sent it to you... Now they're not qualified?
Maybe if you knew how few home transactions are 20% down and/or conventional these days, you'd feel better... The overwhelming majority of closed sales are using HUD programs now. The reality with contingency offer #1 is that they're promising you money they don't have yet (coming from a future sale of an existing home). Meanwhile you have a pre-qualified VA buyer ready to go. I can't imagine how you'd feel about a FHA 3.5% down. I mean you do realize that in the end you get the full purchase price whether it's VA or conventional.
...with VA, and basically no money down we would NEVER had accepted the offer.
7% down is better than most offers you may get. Waiting for 20% could be a very long time. And as noted, it's all cash to you in the end.
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