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I lost my job and needed to unload my house fast before it foreclosed. I have a lot of equity in it, but it isn't really market ready. I bought it as a foreclosure and the previous occupants did a lot of cosmetic damage that I haven't been able to afford to fix.
I found an investor who offered what I was looking to get. It's a very good deal for him. Houses in my area with the exact same floor plan are selling for about 30 - 40k more than what I am selling it to him for, and my house is on a corner lot a half block from a park. There are hardly any foreclosures left in this market and the ones that are left are selling for more than what I am selling this house for.
I had been previously jerked around by another investor who strung me along for two months before deciding he couldn't find the funding. I don't think he ever really had an intention of actually buying the house. I think he was just expecting me to move out immediately and he would do some half-ass repairs on the cosmetic stuff, show it to other buyers and try to sell it to someone else and then close with me at the same time. In other words, he wanted to do the job of a real estate agent but make a lot more money. When I wouldn't move out he decided he couldn't get funding.
So, when I made the deal with the second investor I was very specific about wanting to close ASAP. I asked him repeatedly if financing would be an issue and he assured me that it would not. We made a deal and were supposed to close last week.
Two days before we were supposed to close neither I nor the escrow officer had heard anything from them for weeks. I sent a couple of emails and finally got a response asking to extend closing for two weeks. I told him that that wasn't acceptable and that we needed to close sooner and he basically ignored what I said and just keeps telling me he wants to close at the later time.
Obviously, I can't force them to close. Apparently, since there was no "time is of the essence" clause, there is nothing I can do. What is the point of even having a closing date in a contract if the buyer can just blow it off?
The new date that he wants to close is only 3 days before the auction date.
I'm so angry I could throw things. I was planning on buying another house with the money from selling this one. That house is a bank-owned property and since it is a cash offer the bank won't let me make the offer until I have the cash in hand. Meanwhile, the price on that house was dropped significantly two days ago and there is basically no way it will still be there when we get to the new closing date.
I've basically lost out on a ridiculously good deal because this guy won't close. I've told him this repeatedly, but he is just ignoring it or asking me to be patient.
This is not some small-time investor, either. This is someone who is a major RE investor in the area and even teaches classes and writes books on the subject.
I'm tempted to tell him where he can stick it and refuse to extend the closing and just let the bank take it, but since there is no "time is of the essence" clause, I don't even think I can. I think they can compel me to close if it is within a "reasonable" amount of time.
Any "time of the essence" I've ever had to deal with has come from my lawyer, in letter form, and sent to the buyer.
Recent one sent to a buyer asked for damages (my cost per day to NOT close) and was 2 months retroactive if buyer did not get his act together within 5 business days. We were supposed to close in October (and that was pushing it). We closed in February.
You don't seem to have that time and your buyer knows it. Sounds like he liked your house, knew you were in foreclosure and is just waiting for it to go to auction after playing you.
Do you have a lawyer handling your foreclosure? Either way, you might want to appeal and extend the auction date if you can by using your contract for sale as proof that you have an interested buyer - does your lender know you have a contract to sell?
How many times, if any, has it already been extended?
I thought he might be trying to string me along until it gets foreclosed, but the houses in this area are selling for more than this even on auction. It's a competitive market, because the prices are going up very fast. If the cosmetic repairs were completed, my house would be worth over twice what I paid for it two years ago. Also, why would he open escrow and put down earnest money if all he wanted was to string me along?
If they did delay everything until auction and I could prove they bought it off of auction, wouldn't they be liable for some kind of damages?
The escrow officer has a pay off thingy from the lender, so I am assuming the lender knows about it. I can call them on Monday to make sure and see if they can extend the auction.
Any "time of the essence" I've ever had to deal with has come from my lawyer...
Do you have a lawyer handling your foreclosure?
It has been rather consistently reported here that Arizona is a special and magical place
where no one needs an attorney for real estate transactions. Could they be wrong?
Seriously, stop accepting offers from people who dont have financing lined up. Simply tell them, call me back when you have financing and I will accept your offer. Work on delaying the auction, if you dont know how to do it, get a local lawyer who does.
So, when I made the deal with the second investor I was very specific about wanting to close ASAP. I asked him repeatedly if financing would be an issue and he assured me that it would not. We made a deal and were supposed to close last week.
Two days before we were supposed to close neither I nor the escrow officer had heard anything from them for weeks.
if the closing date (that passed) is on the contract and signed by both parties, then you can choose the rescind the contract. The contract terms have not been met. You can relist the home and focus on another buyer.
I know someone that changed their mind about selling their home. The buyer was supposed to have the money to the seller by X day. the buyer was a day or so late on getting the money wired. The contract terms were not met because the money wasn't in seller's hands by midnight on the agreed upon date in contract. the seller rescinded the contract and attorneys confirmed that this was a legal "out".
So, when I made the deal with the second investor I was very specific about wanting to close ASAP. I asked him repeatedly if financing would be an issue and he assured me that it would not.
It doesn't matter what someone tells you. The only thing that matters is what is written into the contract.
Even an earnest money desposit has little sway in assuring a closing if the Purchaser has numerous ways to get the deposit refunded. People should get proper legal representation when venturing into unknown legal territory--especially so if they are selling real estate to a more experienced real estate investor.
You have little leeway now that a signed contract is in place, but you should still see what a qualified real estate attorney would recommend for your situation.
I see so many complaints on this forum for what amounts to basic real estate practice. What sort of contract are you using that doesn't have some sort of 'time is of the essence clause'? Also, the buyer should have concerns that you could find another buyer if your contract expires. So you too can play the real estate game by telling him to continue to try and get approved for financing while you continue to work with other buyers. Why lock yourself into a contract if he isn't going to abide by one?
Most buyers should already be pre-approved and, if not, should allow your agent to keep up on the details with the lender. So if the buyer legitimately needs more time then you can verify the details with the lender rather than just relying upon his word. You really need the lender's response to this.
Finally, in our market, everyone has an attorney and our contact binds the buyer to purchase the property unless notice is provided by the buyer, prior to the expiration date of the financing contingency, to the seller. So his lack of being able to secure financing would void the contract unless he didn't provide proper notice, at which time you could renogiate the terms of the contract if you desired.
How much is the minimum auction price compared to your agreed upon sale price?
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