Expert: Sue Bernstein - 2/23/2006

Question
I am a first time buyer.I wrote a purchase agreement with a owner.Here the owner herself is  a real estate agent so she acted as buying agent to me. Of course the listing agent is different, and that is her sister only.But I am increasingly getting doubts about her fairness as she did not disclose all the details about the property to me when I wrote the offer on 02/08/2006.I removed the financial and inspection contingencies.On 02/20/2006 she was telling me that her lender has to agree for the contract as she is selling the property for $560,000(which is $25,000 less than her purchase price of $585,000).She did 100% financing with 0% down payment.Now what will happen if the lender does not agree for that price ie 560,000. I am not going to buy that property for more price.I spent aroung $1000 for inspections and others. Will I get back my deposit amount($17,000) and the damages(the $1000 I spent)in case her lender doen not agree?

Answer
Dear Laxmi,

I think your first problem was not seeing that there might be a conflict of interest having the seller be the agent representing you and the listing agent being her sister.  When your offer was accepted there should have been somewhere in the contract that it was subject to the lender's approval because the sale was what is called a short pay.  If the lender does not approve the short pay you will not be forced to pay a higher price and should be able to get out of the deal and get your deposit back. You would have to check and see if the contract specifies that the seller would owe you damages if they are unable to perform.  If it is not covered in the contract you might have to take the seller to small claims court and have it decided there.  If you are unable to complete the sale you might want to speak with someone to make sure all your rights are protected.
I hope you find this helpful and good luck.

Sue Bernstein
www.SueBernstein.com