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I (seller) received a cash offer through a buyer’s agent and it has been in escrow. But the buyer failed to get money by closing date.

Asked by Voices Member, Wed Aug 4, 2010

In fact he was not a cash buyer and was trying to get a loan. The buyer’s agent did not know he did not have enough fund either. Since there was no contingency in the contract, the buyer has to lose his certain deposit (20K). I signed the escrow cancellation form but it seems like he does not sign. Escrow says they need the buyer’s signature to release the deposit. What action should I take first, if the buyer kept it for not signing? I am a By Owner Seller. Should I contact the buyer’s agent’s broker firm? (If it was closed, I was going to pay 3% to the firm). Eventually I may have to go to court, if it is the only solution though. I appreciate any advices.

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14
Dp2
Thank you for all the information you gave me. I appreciate it.

Green
0 votes Thank Flag Link Wed Aug 11, 2010
Seller financing works like any other form of financing--the key difference is that you'd become the bank. You'd use a regular purchase and sale agreement just as you would had the buyer obtained financing from a lender. Yet, you'd have more control and flexibility. Don't worry about running the numbers for the buyer. If the deal works for you, and if the buyer feels that those numbers will work for him/her, then move forward with the deal (of course with your attorney's blessing).

The risk for you is low: if your buyer stops paying, then you can foreclose, and sell that property again to someone else. You'd also earn a much higher ROI selling with seller financing than you would with selling for cash and depositing your proceeds into your bank account (to earn that measly < 1% annually). Plus, there are some potential tax benefits that you could gain by selling with seller financing (which you'll need to consult with a decent CPA on that).
0 votes Thank Flag Link Mon Aug 9, 2010
David,
>Is this concerning a unit in the Hawaiian Monarch? Please advise...

No, it is not about the Hawaiian Monarch.

Thank you.
0 votes Thank Flag Link Sun Aug 8, 2010
Is this concerning a unit in the Hawaiian Monarch? Please advise...
0 votes Thank Flag Link Sun Aug 8, 2010
David,
>Court costs are likely to eat up the whole 20k unless some miracle happens.

I will be careful.

Thank you.
0 votes Thank Flag Link Fri Aug 6, 2010
Frank,
Since the buyer was very motivated, they put a 'cash offer' and there is no a contingency for financing in the contract.
Thank you for your information about rental condo expenses.
0 votes Thank Flag Link Fri Aug 6, 2010
Ken,
>You should contact the Buyers agent Broker to see what they have to say

I will be going to contact the buyer's agent broker.

Thank you.
0 votes Thank Flag Link Fri Aug 6, 2010
I agree with Keith. Every For Sale By Owner should read this. Having an agent on your side may have alerted you to some of the red flags that an experienced agents recognize. The Buyer probably knows that unless he signs cancellation instruction, he's got you over a barrel. You should contact the Buyers agent Broker to see what they have to say. Good luck.
0 votes Thank Flag Link Fri Aug 6, 2010
Get a lawyer and buckle down.....Contact escrow concerning their steps to release the funds to you. See if the buyer's agent can accomplish those so you can get your money and get back on market, or proceed with the seller if you can salvage the transaction.

Court costs are likely to eat up the whole 20k unless some miracle happens. I would personally do everything you can to stay out of court.
Good luck and call me next time you want to sell something.

Please let me know how it turns out via email. TheOahuAgent@me.com

David Nash
The Oahu Agent
Technology loves you!
Web Reference: http://www.TheOahuAgent.com
0 votes Thank Flag Link Thu Aug 5, 2010
Hi Green,

The management costs will run 10-20% unless they are local and managing it themselves.
The taxes will be both TAT and GET, so more than 16%. That's a lot of money going out. Who is managing it now, you?
When you say "there was no contingency in the contract" what do you mean? Normally there is a contingency for financing.
I hope it works out well for you.

Aloha,
Frank
Web Reference: http://www.hawaiihome.biz/
0 votes Thank Flag Link Thu Aug 5, 2010
Dp2,
I was just thinking the same thing. Is it called Agreement of Sale? Anyway, I calculated the case of owner financing. By the way, this sell is for an investment property (short team rent). According to my calculation, the buyer’s monthly rent income can be negative with smaller down payment than 35-40% down (TAT tax is higher etc). I see he has 15% down (which is in escrow now) and I am not sure if he has another 20% in cash. If monthly rent income becomes negative for him, I can easily imagine that the monthly pay back to me can be tough for him which is risky for me. But thank you so much for the idea. I was thinking of it too and was studying about it. If he can find another lender or third buyer in 3-5 years, and if he can keep paying to me by time (balloon payment?), it may work- Am I correct?
0 votes Thank Flag Link Thu Aug 5, 2010
Another option--provided that buyer still wants that property--is for you to offer to sell with seller financing. That will eliminate any need for any lender financing, so that the buyer actually can perform on the rest of the terms of your agreement. However, if the buyer still opts to not perform, then it's probably time for you to consult with an attorney.
0 votes Thank Flag Link Thu Aug 5, 2010
Keith,
Thank you very much for your advice. I know a good real estate professional. Probably his advice would not be cheap, but I will consider to see him if the buyer dose not sign. But I notice that the buyer put a lot of money in escrow besides the deposit. If the buyer dose not sign for cancellation, he cannot take out the fund either. I do think, the buyer will sign. I will be more careful next time.
Thank you.
Green
0 votes Thank Flag Link Thu Aug 5, 2010
Green,
First, I am very sorry about your situation. To veterans in the business of real estate "Cash Buyers" always send up red flags...just as you have found.

1. The only person who can advise you should be a real estate professional, preferably an attorney, who has reviewed all the documents.

2. Because you started this on your own, without professional representation, you should know that you may have to pay for the advice.

As a note for future transactions, Realtors are worth their compensation, otherwise we would not have been in business as long as we have.

Good luck to you.

Note: Good advice is not cheap, and cheap advice is rarely good.

Keith
0 votes Thank Flag Link Wed Aug 4, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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