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Had I been the sellers agent I wouldn't have made that offer contingent on financing, because the buyer definitely doesn't appear to need it.
The new rules now are that the bank has to state in the letter every cent that is in the bank account, rather then just stating the required funds are available. I hate it. As a buyer it may be to a disadvantage to have so much more and have to show it. Not wanting to derail your thread, just telling people that don't already know this.
Geez. The more I think about this one it just gets dumber and dumber. Where I am at least a house costing $225k is an average or below average 3 or 4 bedroom about 2000 square foot or so. I don't see how he thought it worth the risk. It would have been easier to get out of moms basement and get a job, build some credit and give it a bit of time. Its a really good example of someone working very hard at not working in order to obtain something that wasn't out of his reach if done in an honest way.
And also to clarify to the person who says my contract was written by a lawyer, it was not. That is not something that is done around here. The agents are in charge of that.
The RE agents write a legal contract? You are selling a home without an attorney?
Sorry to say, but that's your problem right there. A home sale is a big ticket item with many details. It may not be how it is done around there, but I cannot fathom entering into such a contract that is written by real estate agents and not an attorney. I would certainly never sign any contract without having an attorney review it first. A real estate agent is not qualified to write a detailed legal contract.
I guess you have learned why you should have an attorney, despite what the "norm" may be in your area. At this point you can only hope there is some clause in the contract that protects you. Likely, the buyer knows how to work this scam and you will not see the money.
I couldn't imagine how someone could pull off a scam like this. Now - realizing that it was a DIY contract - it makes sense.
Either way, my original point still stands. This is well out of the "agent" realm (unless the buyer simply agrees to let yo have the deposit). Your only recourse it to get a real attorney. DIY got you in this deep and will only get you in deeper. Unless real estate agents also file and prosecute court proceedings in your area. Perhaps you can get selected for "People's Court."
I am not blaming either agent at this point. Do I think they could have dug deeper into my buyer? Sure - we all could have I guess. But who thinks you need to investigate a buyer of your home? I will from now on though! But in all honesty I think we were all scammed by this guy, his agent included.
RE agents around here exercise due diligence. They do not take buyers to homes they cannot afford and will not make offers without some legitimate proof of funds/pre-approval letter from a verifiable source. Things seem to be much more free-wheeling in your area. Still, the buyers agent was totally derelict in his/her duties when judged by any reasonable standard.
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I want to clarify a few things here that are not correct.
1. It is not a million dollar house. It is a $225,000 house - this guys POF's from the bank says he has a million dollars in the bank.
I can show you a PDF stating I have $500 million dollars. I can show you a PDF stating I am the President of the United States, along with a list of my blockbuster movie credits. Doesn't make any of it true. Someone dropped the ball. In my area, that would be the RE agent. Vetting buyers is one of the things they get paid for.
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2. There is no go fund me page. This is a page on an investors site stating he has a contract on my house and wants someone to fund this purchase for him. And yes, I made a copy of this page for my records that clearly shows he entered this contract with no money to actually purchase the home.
Look at this from the other side...
Did you ask how he was going to finance the purchase? Is there a contractual prohibition on funding in this manner? Does the contract state he needed money to purchase the home? (Probably not since the purchase was contingent on financing).
You agreed to a financing contingency. The buyer attempted to obtain financing in this way. He didn't get it. Seems like he satisfied the terms of the contract and can walk away from the deal with his deposit in tact. Ten bucks says he was savvy enough to make sure the contract allowed for this exact loophole. Not to beat a dead horse, but this is why most people have a lawyer review draw up and review a contract before signing.
The RE agents write a legal contract? You are selling a home without an attorney?
Sorry to say, but that's your problem right there. A home sale is a big ticket item with many details. It may not be how it is done around there, but I cannot fathom entering into such a contract that is written by real estate agents and not an attorney. I would certainly never sign any contract without having an attorney review it first. A real estate agent is not qualified to write a detailed legal contract.
I guess you have learned why you should have an attorney, despite what the "norm" may be in your area. At this point you can only hope there is some clause in the contract that protects you. Likely, the buyer knows how to work this scam and you will not see the money.
I couldn't imagine how someone could pull off a scam like this. Now - realizing that it was a DIY contract - it makes sense.
Either way, my original point still stands. This is well out of the "agent" realm (unless the buyer simply agrees to let yo have the deposit). Your only recourse it to get a real attorney. DIY got you in this deep and will only get you in deeper. Unless real estate agents also file and prosecute court proceedings in your area. Perhaps you can get selected for "People's Court."
C'mon. In many areas real estate agents use standardized fill-in-the blank contracts which were written by attorneys. Real estate agents don't write the contracts. Regardless of what is customary, however, I do believe that it is a good idea for a real estate attorney to be consulted--especially when there are areas of the contract which are not fully understood.
The new rules now are that the bank has to state in the letter every cent that is in the bank account, rather then just stating the required funds are available.
That's not so, at least not in all areas.
I recently did some no-contingency RE deals and produced a bank letter. The letter did not give any details on balance. It simply stated I had available funds in excess of $xxx (xxx being the purchase price of the property). I specifically didn't want my balance to be made public and the bank had no problem honoring that request. It was actually the bank that suggested the wording. It would not surprise me, however, if different state have different rules on this.
C'mon. In many areas real estate agents use standardized fill-in-the blank contracts which were written by attorneys. Real estate agents don't write the contracts. Regardless of what is customary, however, I do believe that it is a good idea for a real estate attorney to be consulted--especially when there are areas of the contract which are not fully understood.
Fair enough. I have been involved in several real estate transactions over the past few years for myself and family members. Every contract was a "standard" form, just like the "no attorney" locations you mention. However, every contract also had additions and deletions along with at least one rider. Every home sale/purchase deal is unique and none exactly fit an off the shelf form.
When I state "written by" I refer to the additions, deletions and riders which are on every contract. if you want to trust that to a RE agent on a $250k deal, go for it. I prefer a knowledgable RE lawyer.
Either way, I would not trust a RE agent to review the contract with me and interpret the legalese. A home is a major purchase/sale. Even if you are using an unmodified, over the counter form, it would be crazy to sign it without having a qualified professional review it for/with you - all IMHO. I think this thread is a perfect example.
RE agents around here exercise due diligence. They do not take buyers to homes they cannot afford and will not make offers without some legitimate proof of funds/pre-approval letter from a verifiable source. Things seem to be much more free-wheeling in your area. Still, the buyers agent was totally derelict in his/her duties when judged by any reasonable standard.
I can show you a PDF stating I have $500 million dollars. I can show you a PDF stating I am the President of the United States, along with a list of my blockbuster movie credits. Doesn't make any of it true. Someone dropped the ball. In my area, that would be the RE agent. Vetting buyers is one of the things they get paid for.
Look at this from the other side...
Did you ask how he was going to finance the purchase? Is there a contractual prohibition on funding in this manner? Does the contract state he needed money to purchase the home? (Probably not since the purchase was contingent on financing).
You agreed to a financing contingency. The buyer attempted to obtain financing in this way. He didn't get it. Seems like he satisfied the terms of the contract and can walk away from the deal with his deposit in tact. Ten bucks says he was savvy enough to make sure the contract allowed for this exact loophole. Not to beat a dead horse, but this is why most people have a lawyer review draw up and review a contract before signing.
Except he did get financing - and he did not like the terms so he walked away from it. I have proof now that he did this. He had financing and decided he no longer wanted to do the deal. THAT is not covered under the financing contingency. His own agent wrote in PR under the rate and not an actual number so he cannot use the "the interest rate was to high" because it wasn't. It was prevailing rate. And at this point - I am getting a lawyer involved because I feel that he is in breech of contact. He thought he was just going to state he was not able to get financing and not have to prove it. He cannot produce a denial letter (it has now been 3 days) and it is because he was not denied. He thought we would just accept that as his excuse. I don't think he thought that we would dig further in this.
Except he did get financing - and he did not like the terms so he walked away from it. I have proof now that he did this. He had financing and decided he no longer wanted to do the deal. THAT is not covered under the financing contingency. His own agent wrote in PR under the rate and not an actual number so he cannot use the "the interest rate was to high" because it wasn't. It was prevailing rate. And at this point - I am getting a lawyer involved because I feel that he is in breech of contact. He thought he was just going to state he was not able to get financing and not have to prove it. He cannot produce a denial letter (it has now been 3 days) and it is because he was not denied. He thought we would just accept that as his excuse. I don't think he thought that we would dig further in this.
If he did receive financing and then decided to back out, you very likely have a case. Again, it all depends on the actual wording of the contract and the exact circumstances of the loan offer he received. I hope it is as cut and dried as you believe.
I am glad to hear that you are getting an attorney involved. It is the only way you are going to resolve this. That being the case, I would suggest you terminate all communication with the buyer and/or his agent. Deal strictly with your attorney going forward.
Best of luck.
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