Expert: Sue Bernstein - 4/24/2007

Question
QUESTION: My wife and I put our LA home up for sale.Had several offers, but one investment company came in and made great offer, so we accepted. We went through all the proper paperwork and the investment company stated it would be a cash buy, and sent financial statement showing money available, and put 3% into 30 day escrow, two weeks before closing they asked for one week extension, so we said ok! Than they have asked for several more extensions and released the 3% down as good faith. We since then have sent all the contents of our house to the east coast thinking the final closing was near (not)We are living on crates and sleeping on airbeds, the investment company is still asking for extensions (has been two months.) We signed the extension untill 20th of april but asked for another 3% and 100 dollars a day till escrow closes.I feel this is not unreasonable, considering the condition this has caused. My question is, are there realestate scams out there, and if yes does this sound like one?
ANSWER: Dear John,

It is not possible to tell whether you are being scammed or not but probably not since there would be no gain for the buyer.  My guess is that they are trying to get the money to close from other sources rather than use their own money and are having problems.  Have all contingencies been removed? I would want an explanation of why they need an extension and have your agent verify.
If you can get more money released to you that would be great including a penalty for late closing.
At a certain point there has to be an end game and you will be better able to tell when that will be if you know why they are requesting these extensions. The fact that you have been doing this for 2 months concerns me.
I hope this helps and good luck.

Sue Bernstein
www.SueBernstein.com

---------- FOLLOW-UP ----------

QUESTION: Miss or Mrs. Bernstein,
Thank you for your response. I am not sure what contingencies you are refering to but just to let you know the Date has come and gone (4-20-07) and no performance. There was no response to the addendum we sent. On the 23rd the Investment company called my real-estate agent and stated the were having problems with THEIR INVESTERS. (what ever that means) Now I have two last questions, 1. I believe we should return the 3% they released to me, My wife believes we should keep it. What would be in your professional opinion the standard course between seller and buyer in these cases? 2. If the Investment company wants to continue with the transaction, am I obligated to do so? Thank-you for your time. John

Answer
Dear John,

Everything depends on what your contract says.  Based on what you told me it sounds like you are under no obligation to return the 3% nor should you.  It also sounds like you are under no obligation to extend the transaction.  My first guess was correct.  They had no intention of using their own money to close but have (or had) investors who seem to have disappeared. You have to think about what is best for you and cancelling the transaction and getting your house back on the market might be the best way to go.  Speak with your agent for further advice.

Hope this helps and good luck.

Sue Bernstein