I need legal suggestions about a real estate deal gone wrong...UPDATE

Discussion in 'Random Ramblings' started by sred98, Jan 22, 2009.

  1. sred98

    sred98 Chillin' With My Peeps

    Jan 18, 2008
    Oklahoma
    We are consulting our attorney tomorrow, but this happened after hours...

    We have been in the process of buying a house. We had a realtor friend get involved, because we didn't trust the people we were buying it from. They were doing a For Sale By Owner. He agreed to write up the contract for a flat fee. Great. After we agree on a purchase price and sign the contract, it comes to his attention that it is under contract with a broker. They basically pay an upfront fee for this guy to post it on the Multi-List. They also had it with a 3% commission to brokers.

    We had done all the appraisals and inspections. We had already arranged financing. That was not a problem.

    The appraisal came back $45,000 UNDER the agreed price. We got another appraisal done, that was done by a "friend of a friend" of theirs. It came back at the sales price. [​IMG] In the mean time, they have relisted it and are showing it.

    We have a signed contract and have put earnest money down. We need this house, because I switched the kids' schools at semester, using the contract, which is permissible. It is also adjacent to our property that we already own.

    The contract is still good. We are waiting for the appraiser to send the 2nd appraisal to our mortgage lender so we can complete closing.

    Has anyone had this happen before? We are hoping to sue them and hold up the title of the house so they can't sell it or refinance. Actually, we are hoping a not so nice letter will suffice. Will this hold up in court? I know that buyers can back out, but can sellers? They are living in another house, so it isn't like we would kick them out of their house.

    I know this probably sounds really mean, but we have been through a really rough time with these people. They are immoral and crooked as they come. I found where they had relisted it 5 days after we signed the contract. We need this house. There is nothing else close by or in the district that we need. We have been going back and forth for over a year, then when we had the contract, we thought it was a done deal. [​IMG]

    I would appreciate any advice, but please no flaming. I can't give any more details because this is probably going to court.

    Thanks,

    Sred
     
    Last edited: Feb 27, 2009
  2. lockedhearts

    lockedhearts It's All About Chicken Math

    Apr 29, 2007
    Georgia
    I have never had this happen. but I have some legal knowledge and in my unprofessional opinion, the fact that they are showing a house that is under contract seems like a form of fraud.

    If they sell that house out from under you, that would most certainly be fraud and you could sue them for that.

    Your best bet is to get a knowledgable attorney who is familiar with real estate and get him to deal with this quickly.


    Good Luck!
     
  3. Wifezilla

    Wifezilla Positively Ducky

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    I don't know if you can force them to go through on the deal (this is called SPECIFIC PERFORMANCE), but they may be liable for damages.

    The "friend of a friend" appraiser can be in big time trouble if he filed a false appraisal. With all the shenanigans that have been happening in the RE market, regulators have NO sense of humor about this.

    While I understand you wanting to get advice, real estate laws are different in each state. I am glad you are getting an attorney involved.

    That being said, I would raise holy hell until i got what I wanted. The threat of bringing to to the attention of the attorney general, real estate commission, etc... may get them to cooperate.

    MAKE NOISE. You have nothing to lose.
     
  4. mom'sfolly

    mom'sfolly Overrun With Chickens

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    Austin area, Texas
    I would be really worried about an appraisal that came in that much lower than the asking price. I would be very concerned about them listing it with a signed contract. I don't know how the contract is written, but it would seem to me that it should be binding for both sides. I don't know much about the local laws governing home sales but you might try googling it.

    I just looked up a standard real estate contract for Oklahoma, and it looks like it binds both the buyer and the seller to the sale barring anything like a bad appraisal or bad inspection. I would read and re-read your contract; but if the buyer is trying to sell a house under contract, then I would agree with a previous poster that they are committing fraud. Unless the stipulation is something like "under contract, accepting backup contracts".
     
    Last edited: Jan 22, 2009
  5. porteryork

    porteryork Chillin' With My Peeps

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    A couple of questions first. Are there any contingencies on the contract? Did your agent contact the agent who has the listing?

    It isn't illegal to show a house under contract. Home owners can do that so that if something happens and the contract doesn't close they have a backup plan. However, they must reveal that they have a contract pending.
     
  6. ruth

    ruth Life is a Journey

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    Woodville, MS
    You brought up a few issues:

    First, the seller has to pay the 3% commission, not you. That is standard for For Sale by Owner listings.

    Second, if you have a contract and earnest money down, have the sellers said they are not honoring it or that they are returning your money? Or, are you just upset that they did not pull the listing? Have you contacted the seller and talked to them? If not, I'm not sure why attorneys are getting involved or "nasty letters" need to be written unless there's information that was left out of your posting. A for sale by owner can continue to list the property if they choose and take back up offers. Most licensed real estate agents will not continue to show houses once under contract, at least in Louisiana they won't but for sale by owner can do just about anything they want. Maybe they thought you would back out once the first appraisal came in. Again, have you talked with them?

    Third, and the biggest thing, is that the house is not worth what you are paying for it. Getting a friend of a friend to come up with a false appraisal and sending it to your mortage company is fraud, on your part, doesn't matter whose friend it is.

    Fourth - Do you really want to take out a mortgage for more than the house is worth? What if you need to sell it in the not so distant future? You will be upside down on a mortgage. Did you try to renegotiate the contract with them once the first appraisal came back? Most contracts have an escape clause that says it can be cancelled if the home does not appraise for the necessary amount.

    Edited to add: You didn't say what percentage of the sale price $45,000 was. If it's a $500,000 home, not so big a deal. If it's a $100,000 home, really big deal. At the very least, I would ask for a third appraisal by a licensed real estate appraisal company that comes highly recommended and ask to see the "comps". It's the comps that determine a lot of the value. They must be as recent as possible and less than six months old. But in this real estate market, I would look at comps that are no more than 2 months old to get a real idea of what real estate is selling for.

    By the way, I buy and sell homes as investments and rental properties so I have lots of experiences on both sides.
     
    Last edited: Jan 22, 2009
  7. sred98

    sred98 Chillin' With My Peeps

    Jan 18, 2008
    Oklahoma
    I think y'all can see why we got a realtor to make up the contract, now! They wanted to do it themselves. We aren't worried about paying more than the house is worth (within reason) the house is worth more to us, because it is adjacent to our land. We know that and we know that these people are unreasonable. It is either sell our land and move or buy their house.

    The sellers said that their broker told them that the contract was void because our financing fell through. Our financing did NOT fall through. The first appraisal said the house wasn't worth what we were paying for it. They ordered a second appraisal without talking to us. When it came back higher, we gave the info to our lender who accepted it.

    The problem with pulling the comps is that this is in a rural area with acreage. There isn't anything comparable in the area. They tried to pass off a market analysis from several years back as an appraisal. [​IMG]

    They are refusing to pay the 3% commission. PERIOD. Even though it was listed in the MLS as being offered. Although, with the new listing, they offered $1,000 to an agent.

    They have relisted the house for $5,000 above their appraisal and saying that our contract is void. From what I understand, a contract is a contract. Just because they say that it isn't valid, doesn't mean that it is.

    They do not have an agent. They have a broker who lists it on the MLS for a flat fee. He is the one that told them the contract isn't valid and that they don't have to pay the 3% that was offered on the MLS, when we set up the deal.

    We have talked to them almost daily. We just happened to be there when they were showing it, so they had to tell us what was going on. I talked to them on Tuesday when they got the appraisal back, and again Wednesday, when our lender accepted it.

    This has been a nightmare and I am just glad that we got our Realtor friend involved. He has already called the Real Estate Commissioner for our area, and we are waiting to hear from him before contacting the attorney.

    We intend to pursue this. These people have verbally attacked us, threatened us, and tried to manipulate us. They have never been held accountable for anything in their lives, and this has now gotten personal. We have a legally binding contract. It will be honored if the courts say it must, and we will do anything that is legally within our power to do so.

    I don't want to give the price on here, because I am afraid it is giving out too much info, and with lawyers getting involved, I don't want to push it. But, it is more than $100,000 and less than $500,000. Probably close to the middle area.

    We know that we have grounds if we want to back out of the contract, but we don't. We want to continue the contract and close on the house. We just want to make sure they can't sell it out from under us in the meantime. What happens if they just don't show up to closing? Would a judge make them honor the contract? Can we put a lien on the house to keep them from selling it? I know these sound drastic, but this was a done deal. I have never met two more dishonest people in my life. They need to be held accountable and we need this land.

    Thanks for the advice,

    S
     
  8. Wifezilla

    Wifezilla Positively Ducky

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    Don't wait on that attorney. This case is way to complicated for just a realtor IMHO
     
  9. AHappychick

    AHappychick Wanna-be Farmer

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    In Ny it is legal to continue to show up until closing, but you can not have 2 contracts out at once.
     
  10. skirbo

    skirbo Chillin' With My Peeps

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    Walton County, NW FL
    In many states you can have a back - up contract, but the seller has an obligation to inform the second contract holder that it's contingent on the other sale falling through.

    Their broker is an idiot, if he did indeed tell them that. I wouldn't count on that being the case though.

    Lawyer up. Now. You're more interested in a lawyer specializing in contracts than in real estate right now. You won't be able to sue for specific performance of that contract (in my Florida experience) until the time you have set for closing passes without the property being closed on.

    Good luck. And again-- Lawyer. Now.

    Sarah
     

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