Home Selling in Lebanon>Question Details

Jake, Home Seller in Lebanon, OH

I have a property FSBO. A buyer offered me $170,000 "as is", I accepted. He gave me a check for $1,000 earnest money and he signed a short

Asked by Jake, Lebanon, OH Sun Apr 18, 2010

note stating that he agrred to purchase the property "as is", and the closing would be scheduled ASAP. The note he signed also included the agreed upon purchase price, the amonut of his deposit, and the balance due. I alos gave him a written receipt for his earnest money. When we attempted to capture our agreement in something more formal, he wanted to add multiple contingencies, that I would not accept. He then pulled out of the purchase. I incurred expenses and cancelled another showing based on his agreement to purchase the home. While I was considering whether or not to return his earnest money, he stopped payment on the check, which I had already deposited. If I take him to small claims court, will I likley prevail?

Help the community by answering this question:

Answers

9
Maybe. The only way you'll know is to do it.

I'm not a lawyer, so the following is not legal advice. For legal advice, consult a lawyer.

The facts are he gave you a $1,000 earnest money check, and both you and he signed a sales agreement. You can call it a note if you want, but if it identified the property, the price, the desire to purchase, then that's a contract. You two discussed additional terms--but, even if you two had agreed, oral agreements aren't enforceable. You had (from your description) a written contract.

He then stopped payment on the check. He broke the contract. On the face of it, it appears that a small claims court might find in your favor. As for anything above the $1,000, you'd have to show actual damages. Receipts for expenses that would have been directly related to sales contract would be evidence of damages. Cancelling another showing wouldn't be--you couldn't show that, had the showing occurred, you would have sold your home.

One tip: When you're selling FSBO, always use your own contracts. You have to remain in control. One problem here is that you let the buyer be in control. Never let that happen.

Another tip: Read rockinblu's blog about selling FSBO: http://www.trulia.com/blog/rockinblu/2008/08/thinking_about_…

Hope that helps.
1 vote Thank Flag Link Sun Apr 18, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Jake - Even when you are listed with an agent...Buyers sometimes make additional requests after the inspection or during the attorney review and if the Seller will not comply...the Buyer chooses to walk.

So don't take it personally.
You want to be a FSBO? Man up! and Move on!
Web Reference: http://www.321advantage.com
0 votes Thank Flag Link Mon Apr 19, 2010
Jake
Welcome to the the world of business!

No, you will not be able to collect a dime because you have no damages.

Just for fun, I'd suggest interviewing three Realtors. Ask them to analyze your situation then compare their proposals. If it turns out that you need to list it with a professional (which happens most of the time), then you are all set.

Good luck!.
0 votes Thank Flag Link Mon Apr 19, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Hi Jake........................My personal (and far from legal) opinion is that a trip to small claims court would be a waste of time. You really haven't suffered any damages, and I am sure whatever expenses you may have incurred were minimal.

I am not going to harp on the fact that what you have experienced is one of the pitfalls of trying this on your own, without at least doing your due dillgence and being prepared or educated for this kind of situation.

I don;t know how you worded your initial agreement, but in more formal contracts, how, when, or IF a deposit will or won't be returned is spelled out.

Perhaps in the future, you should consult with an attorney asap to have formal contracts drawn up.
You might also want to ask the potential buyer ahead of time certain questions (have a list prepared) such as whether they have a house to sell.... or whether they are approved for a mortgage or what other terms they might be interested in attaching to the purchase. Most buyers at least want the right to have an inspection. If this buyer changed his mind on the "as is" idea.............It doesn't surprise me one bit.

You have at least learned a valuable lesson......there is more to "selling" your home than simply agreeing to a price. That's just the very tip of the iceberg.

Better luck next time!..................
0 votes Thank Flag Link Sun Apr 18, 2010
Jake I would count myself lucky, the buyer cancelled quickly and you can put your property back on the market. There are buyers who would not have been so easy to get rid of they could tie up your property while they are convincing you on the contingencies. Move on to the next buyer (call them back and let them know home is available) and hopefully you have learned to formalize the offer prior to taking your house off the market and accepting the earnest money. If you had a Realtor the "expenses" you incurred would have been absorbed by your Realtor and you didn't have to pay it till you sold.
0 votes Thank Flag Link Sun Apr 18, 2010
Without seeing the agreement it is not possible to say. This is a question for a real estate lawyer. I will comment that this is the exact type of situation that would not happen if you used standard contracts. I will take it further to say that contacting a lawyer first or better yet, using a professional REALTOR avoids this type of mistake. Remember, time is money and lost opportunity is a real cost. Use a professional and negotiate a reasonable fee. There are so many laws that you simply will not know unless you spend more hours than it's worth and you open yourself up not only to a situation like this but you could easily make an innocent mistake that gets you sued. I understand wanting to save money in this market but nothing is free. Contact a lawyer and see if the cost is worth pursuing this issue
0 votes Thank Flag Link Sun Apr 18, 2010
A lot of it depends on the precise language in your "note," or "agreement."

If you can see a way out of that agreement, so can the "buyer," and he'll be sure to point that out to the judge, and you probably won't win.

Hope that helps,
0 votes Thank Flag Link Sun Apr 18, 2010
In agreement with Anna, this could likely have been avoided if you had Realtor representation. The new contingencies buyer was asking for would have been requested on an amendment and further negotiations could take place instead of simply move forward or back out. You haven't mentioned the use of a title company which I would recommend you think about using in the future. There will be additional costs but I feel the average or better title company will provide a valuable service in assisting both you and the buyer. For example, if you were utilizing such a service they could have advised the buyer that breaking a legal contract might not be in their best interest and suggest alternatives. best of luck, Jake.
0 votes Thank Flag Link Sun Apr 18, 2010
Since you don't have an agent do consider the services, such situations can oftentimes be avoided when negotiated properly or at least do consider consulting with an attorney who specializes in real estate--as for the earnest money, since you did not have a formal written agreement, and not knowing specific details in your notes, you may not be entitled to it at all--consult with an attorney who specializes in real estate and see what options you may have.
0 votes Thank Flag Link Sun Apr 18, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer