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Tara Branz, Real Estate Pro in Akron, OH

Deal didn't close on time, now sellers are homeless. My buyers were supposed to close yesterday and had some

Asked by Tara Branz, Akron, OH Tue Jun 17, 2008

last minute items come up, so we still don't have a definite time to close. The sellers packed up this past weekend and can't move into their new house until their old one closes. Has this happened to you and what did you do about it?

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Hello Tara. I feel for you and your clients. The best thing you can do right now is to calm the waves and get shelter for your clients. Depending on the terms of your contract, the buyers may be liable to pay for the cost that the sellers incur as a result of the delay, but I would be very careful to not push the issue too hard as you don't want the buyer to get upset and pull out altogether. The time around closing is a very emotionally charged time and people don't always make rational decisions. If they did not close on time, they are technically speaking out of contract (at least that's how it would be in CA) and the seller can keep the buyer's deposit money if the buyers have removed all contingencies. Typically, sellers who have already moved out are not interested in keeping the deposit money. They just want the transaction to close and move on with their lifes. You can try to negotiate a per diem at this juncture and keep everybody in contract, but like I said, whatever you do, act with caution and the ultimate goal of closing in mind. If the buyers are not willing to compensate the sellers for any expenses they have while waiting for the transaction to close, they may be able to take the buyers to small claims court after the closing.
Good luck to you and your clients.
Ute Ferdig
1 vote Thank Flag Link Fri Jun 20, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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I have had this happen! In real estate a deal isnt sealed until it is closed. Anything can happen! I am sure that all buyer/seller are emotional. Try and step back and figure out how to work through the transaction and get it to closing. Applying with another lender if needed would be proactive so that if the current lender can not get this closed another lender is working towards closing. Many times they can transfer a file from one lender to another to speed up the process. Since you are not representing the sellers but the buyers all you can do is to work as diligently as possible trying to get your buyers approved for a loan and to closing. If you have buyers/sellers/agents MAD try and remain CALM. Typically if you can get the deal to closing the dust settles! If the sellers are out expenses for a few days of storage or hotel maybe you could work something out between the parties to smooth things over. Staying CALM and keeping your business hat on is the #1 advice I could give. This is not a fun situation I have been there!
Web Reference: http://www.myhomedfw.com
1 vote Thank Flag Link Tue Jun 17, 2008
Mxmama,
Thank you for the pat on the back. This is a very sad tale and it should remind every agent that what we do matters. It affect peoples lives and is sooooo much more than "just putting things on the internet".
As I read your post I was thinking all the things that you've found out and I applaude you for taking action. Be strong and follow through with it. If you do become an agent follow this model TIC Totally Informed Client.
An agent owes the client the highest form af representation. Your agent should have been on top of the escrow all the way through. All contingencies should have been removed prior to you making the move. A deal isn't done till it closes and as we've seen lately things can change, both on a personal and national level. But that means your agent needs to be even more diligent not less.
Good luck to you and stay strong.
Web Reference: http://www.fogcityguide.com
0 votes Thank Flag Link Mon Aug 4, 2008
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
MVP'08
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Thanks for your kindness!
Funny you mention the earnest money... my realtor says since it was contingent on her getting financing she gets to keep it. But I just found out somewhere on the web that if you find out after the closing date its a breach of contract...So than I think I should get it. No one response to me when I confront them. Its really sad. We are all suffering. Its for a reason I know. I think God wants me to do real estate and he is schooling me :-)
I'm attorney shopping. After I spoke with the a real estate commissions investigator he informed me of my rights and said this is a serious civil matter. Also he pointed out that the Code of ethics and standards of practice has been violated by my agent.

Anyway, for those agents who really do look out for whats in your clients best interest give your self a pat on the back!
0 votes Thank Flag Link Sun Aug 3, 2008
Hi Mxmama:

I am so sorry to hear what happened to you and I am very glad that you found a place to vent - I guess that's the least you should be able to do after all the things that have happened to you. I don't blame you, there must be such a strong feeling of injustice being done to you which resulted in the snowball effects including your kids who are innocent.

I suppose you can file complaints and retain good faith deposit, and ask for compensation as a punishment, but it can't undone the harm that's inflicted upon you.

Sylvia
0 votes Thank Flag Link Sun Aug 3, 2008
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
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Thats the nightmare that happed to us about 6 weeks ago, we were told the same thing about the buyer. We were all packed up and no place to sleep. We were moving a few hundred miles a way and everything we owned was going in storage until the house we were building was finished, Our agent said it could all be closed via fax machine and to go ahead and leave town. Well 2 days after the scheduled closing date, I get a call saying "all the banks kicked her out".
That buyer was APPROVED! I had 2 offers the same day, only chose hers because she was approved. NOT pre-approved---I was told approved. Thats the only contract I could enter, and I made it clear to my agent!

She waited until after the closing date to say the banks weren't giving her the loan, but now the loan officer is saying the appraisal was why she didn't get the loan. All this information told to us way after closing date, We have tried many times to work out a deal with the buyer but they never reply. So that tells me they thought they could just back out and say they couldn't get financing. and that would be the end of the story.....

More nasty things to the story that have been done to us. we have lost the house we were building, have no way to care for, maintain, or show the property we have listed, and its starting to look abandoned, my kids missed tryouts for every school in this district because we don't have an address!

All the while my agent has been sitting there saying she didn't do anything wrong. When I ask why I didn't get anything in writing about the appraisal affecting the loan, she doesn't reply.The contract said I had 2 days to lower the price it I wanted to.

I guess I'm venting... I'm sure this wasn't the answers you were looking for anyway, Thanks for reading
0 votes Thank Flag Link Sun Aug 3, 2008
Hi Tara,

I would try to negotiate a flat rate per day as a credit until it closes. I have used the amount per day that the new owner would have been paying on the loan, including taxes and insurance. It will be about 1% of the loan amount, per month, prorated on a daily basis through escrow.

Why can't they stay in the house with futons and sleeping bags? Get a little tent and "camp out" in the living room. It's probably not what they had in mind, but it could be fun.

At this point, ask the other agent what the specific problem is. Perhaps the lender needs some information that you can provide? You have a right to know since technically you could cancel the sale since they have passed the closing date.
I always get an extension in writing. It helps communication and it covers you from looking like the one that dropped the ball if anything gets worse. Everyone wants to stick their head in the sand at this point and hope that closing will magically happen, but you have to keep on top of it and get it closed.

If you have final loan approval (doesn't sound like it though) and there are no other options, you may be able to get an early occupancy agreement for the home the sellers are moving into. These are generally not a good idea, I have only done one of these in the last 3 years since they involve problems of their own.

All the best to you, let us know what happens!
0 votes Thank Flag Link Sat Jun 21, 2008
Yes, It happened on my first listing sale.

That was nerve breaking for me and them - being the first listing sale, my sellers were moving out of town (with trucks, boxes, drive and everything), had to close on their new home being built in AZ (with proceed from this house, of course) and the buyers could not close on time. I could not sleep.

Asked for my broker's advise and ended up negotiating a per dim for my clients while they waited. The house ended up closing a couple days late. My clients ended up staying with his family and did not even bother with the per dim. Everything worked out fine, but that was one of the most horrifying experience for me. i learned a lot from that!

Sylvia
0 votes Thank Flag Link Fri Jun 20, 2008
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
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The buyers have certain responsibilities and can with most contracts be held liable for delays. Check the contract and the paragraph on the closing date. I know in NC if done correctly I have charged the other side for delays.
0 votes Thank Flag Link Fri Jun 20, 2008
If it is the buyer part of the transaction that has caused the problem they should take responsibility for the situation. Best would be to put the sellers up at a hotel or corporate housing place till the deal closes. Last minute things are and should be forseen by you and the lender. I feel from the post that the buyers need to make amends and do it right away, then everyone should work didgently to close the transaction.
0 votes Thank Flag Link Fri Jun 20, 2008
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
MVP'08
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Not knowing all the story the best advise I can give you is to make sure you get an extention signed for the loan approval and closing date that gives adequate time for the lender to pull it together.

If the lender is not a local lender that you know well and trust, I recommend you get the Buyer's to make another application with your preferred lender for a back up.

I had a buyer's lender push back the closing twice. Because I did not know the lender, I had my Buyer make application with my preferred lender for a back-up plan as soon as we were notified that we would not be closing. The Buyer was willing and the Seller and Seller's agent were both pleased that we were being proactive. When the original lender did not close on the third try the seller was willing to give us an addtional 5 days to close based on the new lender's assurance that we would close in 5 days.

The buyer closed with my preferred lender within 5 days of the missed 2nd closing and the loan officer attended the closing.
Web Reference: http://www.cathysloan.com
0 votes Thank Flag Link Tue Jun 17, 2008
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