Expert: Karyn Foley - 7/21/2004

Question
Karyn,

  Thank you for the help, both now and with our past questions.   Kim forwarded your reply to me so I wanted to ask a couple more quick questions in regards to your response.

1) Since we feel mislead and misrepresented by our agent, is there anyway we can legally get out of our contract with the backup buyers?  We do not trust this agent any more.

2) As far as damages, while technically we do not have any outright damages, we did hold the house an extra month for the old buyer, and were out an extra months mortgage payment, actually two considering that even with the backup buyer, there will still be yet another house payment before the house is closed on.   I suppose this is a grey area as it could be said that we would have had to made the mortgage payments anyway.  But we had moved out of the house a couple weeks before what was to be the closing date with the first buyer.

I guess my biggest question now is without knowing all of the details, do you forsee anyway that we might be able to stop the backup contract and dump our agent at this point legally.    And if we were to refuse to close on the house because of our complaints what could happen to us?   We wouldn't likely do this but if we keep getting fed lines then we might end up feeling like we shouldn't close.

All in all we both feel that our agent has mislead us and hasn't kept our interest in mind.   At a number of points over the past couple months both Kim and I have made statements to each other asking who our agent seems to be representing.

Thank you again for all of your help.   I realize that without knowing all of the details that these kind of questions are most likely hard to answer, but even being pointed in the right direction would greatly help us.

Thank you,
Michael

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Followup To
Question -
My husband and I were going to sell our home and we had a buyer who requested 60 days to close.  During this time, we signed 3 addendums to our original contract.  The last addendum that we signed stated that our buyer was going to remove all contingencies and that she was going to provide a letter from her lender stating that she could buy our home without having to sell hers first.  We found out just days before closing that she hadn't had an appraisal our house yet and our agent found out from the lender that the buyer was not approved to buy our home without selling hers first.  2 days before closing, our buyer was asking for another extension which we refused.  We do have a back-up offer and we have now entered into a contract with these new buyers.  We feel that we are entitled to the earnest money from the old buyer as we met all our obligations and she failed to close on the house.  Our agent keeps putting us off when we ask about the earnest money.  He states that his broker is going to have to discuss this matter with the buyer's broker.  (Our agent's broker has been on vacation for 2 weeks now.)  We feel that we are entitled to the full amount.  What is the common practice in situations similar to this?  Is the earnest money split between the agents?  Are we entitled to the full amount?  Should we talk with an attorney?  P.S.  I think I have emailed you before regarding this very same deal.
Answer -
Dear Kim:  I think you may have been poorly represented.  Your agent should have been on top of the situation, and addressed each and every contingency in a timely manner, and had them signed off when the top period expired to do so. Not to allow you to continually sign amendments with no assurances or support.  Also, your agent should have insisted on a pre-approval letter from the lender (up front, at the very beginning) stating your buyer's qualifications, and that your buyer did not have to sell (or did have to first sell) before that purchased your home.  This was indeed sloppy real estate.  I wish I could remember the details of your last inquiry, but I do recollect having heard from you.  Your buyer's deposit can only be given to you with a signed release from the buyer.  Your agent is not being responsive.  Nor is your buyer's owner or manager.  I think that it may not really be worth all of the hassle you must go through, especially when the agents may be the ones at fault more than your buyer is at fault.  Since you are not receiving the assistance you so very much deserve.Plus, I am questioning the fudiciary relationship between you and your agent.  
Sometimes it is difficult to answer questions such as your without the actual contract and the amendments in front of me.  Maybe my concerns were addressed and you have misunderstood.  But what really concerns me now is not your deposit from the previous buyers, but entering into a new contract with a new buyer.  Do you have an official and signed cancellation of your contract with your first buyers?  If not, have you sold to your new buyers subject to your getting this cancellation?  You do not want to put yourself in the position of having sold your house to two buyers!!!  If you sold your house to your new buyers for the same price or more, then you do not have any damages and thus probably do not have a claim on the first buyer's deposit which is the liquidated damages because you would not have any damages!!!!!  Please talk to your agent, and get back to me with the above taken into consideration.  KARYN

Answer
Dear Michael:  I see no real actual damages other than emotionally.  To go further, you should consult a real estate attorney.  I am now worried, though, as to why you now want to start cancelling on an innocent Buyer who is in good faith purchasing your property?!?  Please consult some one for legal advice, as it is becoming too complex and going beyond merely ending one contract and getting into another one.  There are no guarantees in life or in real estate transactions.  You should consider yourself fortunate to have found a new Buyer.  Now, just make sure you are protected by not having sold to two Buyers.  When you moved out prior to your Buyer getting final loan approval and being able to move in, you took a chance.  I think you should feel fortunate that you now have a new Buyer.  Keep me informed, KARYN FOLEY