Expert: Karyn Foley - 6/16/2004

Question
-------------------------
Followup To
Question -
-------------------------
Followup To
Question -
My husband and I were made an offer on our home in TN on 06/02.  Our agent was a little apprehensive about the offer since they buyer is/was selling her home herself.  In the contract, she included the contingency that she would buy our home upon selling her home and wanted to close at the end of July.  She stated that she already had a buyer lined up for her home so we asked for a copy of that contract, a copy of her buyer's approval letter, and a copy of her approval letter from her lender and to close in mid-july.  We gave her 5 days to provide this information.  So far all she has provided to us is her approval letter from her lender.  She said she couldn't reach her buyer so she has decided to auction her home.  That isn't what we asked for in our contract so my question is this current contract still binding.  Should my agent be telling people that the house is under contract when, in my opinion, it isn't?  A contract to auction isn't the same as a contract to buy.  We would like to enter a new contract with this potential buyer but we don't want to scare her off.  She sounds motivated and sincere but we still would like a new contract.  Ideally, we would like the new contract to not have any mention of the house selling at auction.  My concern is what if her house doesn't sell and my husband's concern is what if she doesn't get anywhere near her asking price.  If she agrees to a new contract, what should we put in there protect ourselves from getting further tied up in her drama?  This is a small town area that we are trying to sell in and we don't want to scare a potential buyer off but if there is another buyer out there with less baggage we would definitely take that offer.  People just aren't interested in looking at a home if it's under a contract (at least, I wouldn't be).
Answer -
Dear Kim:
 This is really quite complex, and I may not be completely understanding the details.  First, I feel you really should discuss everything with your agent and your agent's manager, or your agent with the owner of that agent's company.  Each state has different laws entirely, and I am not familiar with the laws in your state.  
 If you cannot obtain clear and concise informtion, I strongly suggest a visit with a real estate attorney.  This would prove invaluable whether or not you ultimately purchase that particular home and sell your own home.
 I do know, however, that it is a universal rule that all real estate contracts must be in writing, and that includes signed acceptances from all principals in the transaction.  That means that the contract can only be changed by either party with the signed acceptance of the change(s) by the other party.  Enforcing a contract or backing out of one involves more knowledge and a copy of the contract.  
 You really are not entitled, in my opinion, for any previous offer or contract on the home you wish to purchase.  What concerns me is that perhaps the home has already been sold to another buyer.  An auction may be or not be permissable at this time if your offer was formally and legally accepted.  That might be a breach of contract.  Again, ask your agent and the concept of an attorney becomes even more viable.  If it is not really under contract, then you should ask your agent why that is being told to other people.  That could be a breach of your agent's fudiciary responsibility, or just plain dang damaging and illegal.
 I fear that you are not getting straight answers, and that you deserve to have a neutral, independant party do a review of all paperwork.  
 Small towns also hotbeds of information, so put your ear to the ground and see if there is anything of import that you can glean from the neighborhood.
 Some people feel that dual agency could lead to a conflict of interest.  Thus. if your agent represents you, can your agent also protect your interests if this agent is also representing the other party?  An office manager or owner could ask some one else in the office to represent either you or the other principal.  Or, if you feel nervous and seek a high level of commitment, you should let your agent know how you feel and that you wish for an attorney to act in your behalf, or even another agent in yet another office that would be deemed more of an arm's legnth transaction.
 Please do not act hastily.  Take the time to seek answers and allow yourself to understand all of the aspects we have discussed.  If you are still unhappy because of lack of knowledge, tell the agent and the manager/owner and go forward immediately to the attorney.  That will cost less now than a situation that could backfire later.  There seems to be too many inconsistencies at present that could lead to ambiguity.  This spells trouble.  Please let me know what happens.
Good luck, KARYN

Thanks for the quick response.  The house in question is one that we are trying to sell as we are moving out of state and we don't plan on purchasing another any time soon.  The last message we have received from our agent is that he was going to attempt to get a new contract for us from our buyer.  She was the one who said she already had a buyer for her old home and now has decided to auction her home instead.  Our contract states that she would purchase our home with the contingency that her home sells and it says that she already has a buyer.  We asked for a copy of the contract that she had with the buyer of her old home within 5 days which she never provided.  She did come up with a contract to auction her home.  A contract to auction a home is not a contract to buy a home.  So I don't think our contract with her is valid because she didn't provide us with the information that we asked.  But I'm worried that our agent is telling people that our home is under contract when I don't believe that it really is.  We are anxious to sell and don't want to scare her off but at the same time we don't want to put all our hopes on to this one person.  We just play phone tag with our agent now.
Answer -
Dear Kim:
 Frankly, I think you are not being treated correctly by your agent.  Again, call her office owner or manager.  If you do not get a response, call an attorney to reconcile this problem and tell your agent that this attorney will see that your agreement with this agent is cancelled.  There is a fudiciary relationship that has been breached.  
 Having sold a house subject to a buyer selling their home can be a terrible waste of time.  In a good seller's market it will limit the amount of showings that your home will have and, depending on how your agent has worded this contingency in the multiple listing service and to other agents, it could preclude your being able to sell to another willing and able buyer.  Sometimes, if the buyer's home is in an extremely popular neighborhood and if they have a potential buyer who could be a "sure thing" you might have allowed them but two weeks to consumate the deal.  Nothing seems to be going the way you had intended nor contracted for.
 Have you also considered that you may have tax consequences by selling and moving out of state?  Please do yourself a favor and discuss this with an accountant.  Your agent, even if helpful, could not give you legal or accouinting advice.  It is a definite no no in the real estate business to give advice outside their area of expertise which should be only real estate and certainly not law or accounting.
 There are many good and trustworthy agents and companies.  Put this problematic and possible dangerous relationship behind you as soon as you can and go forward.  If you wish to know the best way to find an agent, let me know and that can be the subject of another email.
 I am concerned about you, as you have allowed yourself to be put in a very uncomfortable and tenuous position.  Put yourself in the hands of some one who can take control.  No one yet has been held accountable by the most important person in this mix which is YOU, the client.
 Keep me informed.....KARYN

Now we have been given an addendum from our agent simply stating that if we get an offer from someone else, this buyer has 48 hours to remove the contingency that her house has to sell.  I did speak with an attorney who told me that I could cancel our current contract and be within my rights but if I signed this addendum, then the contract would still be valid.  She told me that our buyer would have until July 19 (date of closing) to come up with a buyer for her home.  The attorney did suggest that this addendum spell things out a little better and I allowed her to make some clarifications.  It now states that our buyer has 48 hours to remove all contingencies to sell her home and that she satisfy the terms of the contract (mainly that she provide an approval letter from her lender to purchase our home without having to sell hers first)and that if she fails to do this, then we may terminate the agreement and neither party will have any other obligation to the other.  We still don't feel 100% but I feel like I have a way out with this addendum.  By the way, we haven't signed this addendum yet, I was going to discuss the changes with our agent first but he has yet to return my call and I am interested in our thoughts as well.  I really appreciate your keeping with us.  Your insight has really helped us trust our instincts more, to ask more questions and not just leave things up to chance.  Thank you again!

Answer
Dear Kim:  I feel so relieved that you have sought help from a professional and reliable source.  So, your house is remaining on the market subject to a right of first refusal.  Wise move to only obligated yourself for thirty days.  As we discussed, this clause, however, will scare off some potential buyers, but not necessarily if you are living in a 'hot market".  I still am disappointed that your agent is not living up to your expectations.  Perhaps you would consider replacing your agent once your contract expired with that company.  Every seller deserves to be treated well, and lack of prompt responses to you questions and calls is not fair.  But hang in there and keep me informed!  KARYN