Home Buying in Grand Rapids>Question Details

Xavier, Home Buyer in Grand Rapids, MI

Trying to back out of closing but real estate agent is threatening to sue????

Asked by Xavier, Grand Rapids, MI Thu Apr 16, 2009

We are supposed to be closing on a home in Michigan, in just a few days but since we singed the purchase agreement our financial situation has changed. It hasn't changed drastically but enough to where we don't think we can afford the home. We want to back out but the real estate agent for the seller is threatening to sue us and says we are commiting fraud??? What should we do??

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good evening Xavier....you are in the driver's seat...you are the buyer.(s)......don't be intimidated by the listing agent or the seller(s)......ask your lender to issue a mortgage denial after telling him/her what changed in your situation...then fax the denial to the listing agent....at most all closings, the title company rep always asks if anything has changed in your financial situation since you applied for the mortgage...it is typically listed as a must do "at close" condition on the title company's closing instructions that come from the investor............tell the listing agent you are just saving them wasted time by killing the deal now.......if they still intimidate you.call their broker and tell him/her......don't create new problems for yourselves by closing on a home that you are not sure you can afford.....the other alternative would be to discuss your situation.if it is a debt ratio issue, it might be able to be overcome.......please call if you would like to talk........i hope that helps..bob mcclure- success mortgage partners- plymouth, michigan.......
2 votes Thank Flag Link Thu Apr 16, 2009

unless your contract is still "contingent on your obtaining a mortgage" it doesn't sound as though being denied, would give you a legal escape clause to exit the contract.

your earnest money would remain at risk, and you might find yourself on the receiving end of a lawsuit from the seller to perform. [specific performance].

Now is the time you should be consulting with a real estate attorney, to find out if you have any legal escape route.
1 vote Thank Flag Link Fri Apr 17, 2009
Alan May, Real Estate Pro in 60201
I have to agree with Derek. Asking for a mortgage denial does not sound quite right to me either. Do ask your lender if the changes in your status would cause a denial legitimately. Have you already received a clear to close?
1 vote Thank Flag Link Thu Apr 16, 2009
Maureen Fran…, Real Estate Pro in Birmingham, MI
Interesting advice you just received. You were encouraged to have a mortgage denial authored (possibly even fabricated), whether the facts are there to substaniate it, or not. An answer of which that was apparently worthy of a thumbs up. Wow...

Interesting what we learn about others in the local marketplace on here.
1 vote Thank Flag Link Thu Apr 16, 2009

First and foremost you NEED professional legal counsel and possible representation, which I can not and will not provide. That said, I will provide my OPINION, which again is not legal advice...

I doubt you are committing fraud, but failure to perform in a contract CAN have legal consequences. There may be an argument for fraud in a case where someone is representing that a borrower doesn't qualify for a loan, when in-fact they do. I don't know if that is happening here, but just a thought.

I will add one last nugget ... neither the real estate brokers, or agents, should be parties to the contract. Thus, I don't see how someone who isn't a party to the contract can sue someone on the opposite side who is a party to the contract? I suppose stranger things have happened, though.

Please keep us posted on the outcome. Best of luck to you.
Web Reference: http://DoorToDreams.com
1 vote Thank Flag Link Thu Apr 16, 2009
Do you still qualify for the loan?

What does your agent say?

What does your attorney say?

You need a lawyer's advice at this point more than anything.
Web Reference: http://mioaklandcounty.com
1 vote Thank Flag Link Thu Apr 16, 2009
Maureen Fran…, Real Estate Pro in Birmingham, MI
Contracts are legally binding when entered into. Unfortunately, we live in an environment in which many do not fully understand what they are entering into when they sign an agreement. The aftermath of a broken contract can be signifcant. As others have advised, you should consult an attorney to review the specific terms of your agreement.

However, I noted that you entered into this contract without the assistance of a real estate agent. My advise would be that if you chose to pursue home ownership in the future, there would be benefit in inquiring about the services of a reputable agent. A properly negotiated contract can make all the difference in the world in protecting your interests.
Web Reference: http://www.auduhomes.com
0 votes Thank Flag Link Mon Aug 3, 2009
My biggest question is why you would be looking to buy a house? If a small cut back in your hours would make that much of a difference, you haven't been paying attention to the world around us. You are obviously living outside your means as it is. You should always be putting away money for a rainy day, your retirement, your 3 kids college fund...If your financial situation can be rocked by a few hours, hold off on the house.
0 votes Thank Flag Link Tue Jul 7, 2009
A very unfortunate situation but if you still qualify for the loan you are bound by the contract. I'm not sure the agent can sue you because you don't have any agreement with the agent to pay their commission. That would only apply if the seller refused to perform. In that case it would depend on the terms of the listing agreement. The Seller on the other hand can sue you for specific performance and damages. I would suggest you get an attorney as soon as possible and let them look over the agreement. There may be terms or conditions that would still allow you an out. The money you spend for legal advice could save you untold troubles.
0 votes Thank Flag Link Fri Apr 17, 2009
First, thank you all for taking the time to respond!! To answer your questions Maureen, we do not have our own agent, we were working directly with the sellers agent. We also do not have an attorney. Technically I think we qualify for the loan but we would be cutting it too close for us. Just 2 weeks ago, my hours were cut by 8 hrs per pay period and with 3 kids it might be more than we are able to spend. We told the sellers agent our situation but he just keeps saying we have to close on time, and if we don't then he will sue. During the last few weeks, he never took the house off of the mls and kept the for sale sign in the yard. he was also showing the house to potential buyers, because he showed it to friends of ours. he is a hard man to work with, and we knew that from the beginning, but we really wanted the home. In our purchase agreement it does state they are entitled to the earnest money, which we are not disputing. But I don't see where it says they can sue us?? Should I get an attorney?? my husband even offered to pay the agent for his time but he said no...just buy the home!! Also just curious...we put an offer on the house and the time expired for the seller to counter offer, but the following day the seller counter offered and we accepted that?? Is that still a legal contract?? thanks!!
0 votes Thank Flag Link Fri Apr 17, 2009
How about you read your purchase agreement. I'm guessing it says one of two things. Either, if you back out, you lose your earnest money OR the seller can sue you (not the agent - Maureen is right agents are not parties to the purchase agreement) for specific performance. What your agreement says may help you make your decision.
0 votes Thank Flag Link Thu Apr 16, 2009
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