Home Buying in 92130>Question Details

Mary Smith, Real Estate Pro in Los Angeles, CA

What would you do? Back out of original deal to take back up offer?

Asked by Mary Smith, Los Angeles, CA Sat Jun 15, 2013

I am in escrow with a buyer who will pay all cash after the sale of his house. The buyer promised 10 days to remove the inspection contingency. When that date past, I issued a notice to perform. The buyer submitted a request for repair that same day for work totally about $8000 . He was aware of the needed repairs before making the offer, but found it was going to be more expense to do improvements to the house than he expected.
I have a backup offer from a well qualified buyer for $6000 more than I agreed to with the original buyer. The back up buyers reviewed the inspection report and are willing to stick with the original offer (they REALLY want the house.) The back up buyers have a large down payment and are approved for a loan much larger than needed to buy my house. I'm a week away from closing. What would you do?

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Answers

14
David Rudd’s answer
Hi Mary,

*disclosure* it is always difficult to provide advise without knowing all aspects of the transaction. Start by asking this question to your listing agent.

Given the limited information provided, I have to say as a VERY experienced agent I am not surprised. Many homeowners and their agents are more apt to accept an all cash offer, only to learn that all cash buyers can be more demanding and think they are in the drivers seat.

Ask yourself why you accepted an all cash buyer with an offer price lower than a well qualified, with significant money down financed buyer?

I would have your listing agent speak with the financed buyer, see how long it would take to close with the lender (many can complete in 21 days), then speak with the 'cash' buyer and let them know that if they do not perform, your agent will be canceling escrow.

Best of luck!

David Rudd
Kindred Real Estate
0 votes Thank Flag Link Wed Jun 19, 2013
Dear Mary,
The first buyer is not performing as per the contract and you were right to issue a notice to perform. Follow through and release him from the contract and accept the back -up offer. Your seller will be getting a better deal and you will be able to close the transaction.
Thanks
Janet McCarthy
Keller Williams Realty
858-243-5719
1 vote Thank Flag Link Sat Jun 15, 2013
Hi Mary,
What does your current listing agent suggest? They would have the most information available, and therefore the best advice for you. I think you know the answer, now it is simply mechanics by your agent, broker and/or attorney to make it happen for you. Good luck,
-Steve Seper-
Balboa Park Realty, Broker/Owner
yourdooropener@gmail.com
0 votes Thank Flag Link Mon Jun 17, 2013
I am puzzled! If you have described the situation accurately, the course of action that is the best for you is very clear. Your agent should have given you appropriate advice. Why are you wasting time by seeking input from across the internet? If you question the advice of your agent, ask for a review of the situation by your agent’s broker.
0 votes Thank Flag Link Sun Jun 16, 2013
As a seller you have limited options...That said, if the buyer has not removed all their contingencies and you issued a notice to perform...and it still has not occurred....then you should be able to cancel.

What is the status of the repair request? Have you responded? If so...there's not much you can do...If not, you can respond that you won't do the repairs and wait for that buyer to back out...

At the risk of asking a silly question...do you have a listing agent you can ask?
0 votes Thank Flag Link Sun Jun 16, 2013
The first buyer is within the contract as s/he had an Inspection Contingency.

Luckily you have a backup offer from a party that Really Want the house.

So, work with your agent and go with the Back up Buyer after verifying that they can get the loan.

Good luck.
Ruth
Web Reference: http://ruthandperry.com
0 votes Thank Flag Link Sun Jun 16, 2013
If I read your facts in one light, seems like a no-brainer, but your facts are conflicting. On the one hand, you say the Buyer is not performing b/c he didn't remove the contingencies, and his purchase is contingent on the sale of his house. On the other hand you say you are a week away from closing. These things don't seem to add up. The way you wrote it, I originally thought that Buyer has not removed contingencies within the required timeframes despite the notice to perform, and the deal is still contingent on the sale of Buyers house. If that is the case, personally, I would give the backup all the paperwork (disclosures, inspections, etc...) and give them access to the house and tell the Backup that if they want it, they need to get in there and inspect or do what they want to do and give you an offer with no contingencies and at that time you will take the offer if you can legally still get out of the first deal. Tell them you aren't jumping from one deal with contingenies for another deal with contingencies. Up to them.
0 votes Thank Flag Link Sun Jun 16, 2013
If the backup buyers are willing to proceed waiving inspections in writing, and since they also have very solid down payment, I would probably take the back up offer if you can wait. Just make sure that their credit/income/debt is sufficient to get the loan.

Best Regards,


Lance R. King - Founder/Managing Broker
King Realty Group

DRE # 01384425
415.722.5549 - Cell
lance@king-realtygroup.com
0 votes Thank Flag Link Sun Jun 16, 2013
Hi Mary,

You can carry though if the buyer doesn't perform. Then you'll be free to take the next offer, if you can wait an extra 30 days to close. And, just getting a verbal, "The buyers are OK with not asking for repairs," isn't the same as in writing. So, if this current escrow does cancel, be sure you get agreement in writing from the new buyers before accepting their offer.

And, while you're countering, maybe shorten the contingency period so you don't have to wait 17 days. In this market, buyers should realize there's another buyer right around the corner.

Good luck!

Warm Regards,

Cory La Scala, REALTOR
Independence Realty
619-825-6421 Direct
619-884-3452 Cell
Lic # 01443391
0 votes Thank Flag Link Sat Jun 15, 2013
I would move on to the second offer.
0 votes Thank Flag Link Sat Jun 15, 2013
Your broker should get involved about this and advice you what is the next right step to take.
0 votes Thank Flag Link Sat Jun 15, 2013
You don't say whether the buyer has sold his house yet, and whether he has the cash to follow through in a week. The question I pose is, is this a negotiation or a stall for more time. Time to talk to your agent and find out what's going on. You are talking about giving up a possible cash offer for a home loan that will require another month to process. I'm concerned why you're asking us instead of your agent!
0 votes Thank Flag Link Sat Jun 15, 2013
I second Janet. In this market, any time a late to the table buyer can take a deal away from another buyer, they will typically be much more easy to work with - not always, but if you set it up right, they shouldn't give you much trouble. Tighten up the contingency removal on the second buyer and dump the first. The second buyer undermines the ability for the first to negotiate anything. Good Luck!
0 votes Thank Flag Link Sat Jun 15, 2013
If you really want to get out of your current contract to go with the other offer, my advice would be to discuss this with an attorney.
0 votes Thank Flag Link Sat Jun 15, 2013
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