back out of a real estate contract?
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back out of a real estate contract?
We recently hired a read estate agent to sell our house. He provided us with a list of comps, where most of them are from last year, but he said that there are no comparable houses on the market. The same agent has helped us find and secure a house we are very satisfied with, and gained our full trust. So we didn't question his claim, didn't do any research, and simply decided to list our house at his suggested price, which happens to agree with what zillow is suggesting.
The same day we signed agreement with him, instead of actually listing our house on the market, he sent us a clean offer (no contingencies whatsoever) from a builder he worked with, and told us that we will only be paying 3% commission fee (over $20k in saving) instead of the standard 6%. With a low expectation of our house value, happy with the extra saving in commission fee, we countered based on the market information our agent provided, and it was immediately accepted by the builder.
The whole thing makes me uncomfortable, so I decided to do some research. To my dismay, I found multiple comparable houses on the market, with a listing price around $50k more than ours. Some of them are sold at a price $100k more than our offer. There is this one house (smaller lot, listed at $50k more, and sold at $90k more before he generated the comps for us) I did notice before we counter, but he wrongly claimed that it was still active. Our agent later did offer to waive all commission fees from us, since we are very upset.
I know that we were very naive in this whole process, and are ready to accept and learn from this expensive lesson. I did talk to one attorney to see if we can get out of the contract, but he said that it is hard to approve there is anything going on between the agent and the builder, and not worthwhile going through the legal process.
Any advice from the wise bogleheads community before we just throw in the towel? Is there anyway to back out of the contract if we were provided inaccurate information from our agent, whether intentionally or unintentionally?
Thanks!
The same day we signed agreement with him, instead of actually listing our house on the market, he sent us a clean offer (no contingencies whatsoever) from a builder he worked with, and told us that we will only be paying 3% commission fee (over $20k in saving) instead of the standard 6%. With a low expectation of our house value, happy with the extra saving in commission fee, we countered based on the market information our agent provided, and it was immediately accepted by the builder.
The whole thing makes me uncomfortable, so I decided to do some research. To my dismay, I found multiple comparable houses on the market, with a listing price around $50k more than ours. Some of them are sold at a price $100k more than our offer. There is this one house (smaller lot, listed at $50k more, and sold at $90k more before he generated the comps for us) I did notice before we counter, but he wrongly claimed that it was still active. Our agent later did offer to waive all commission fees from us, since we are very upset.
I know that we were very naive in this whole process, and are ready to accept and learn from this expensive lesson. I did talk to one attorney to see if we can get out of the contract, but he said that it is hard to approve there is anything going on between the agent and the builder, and not worthwhile going through the legal process.
Any advice from the wise bogleheads community before we just throw in the towel? Is there anyway to back out of the contract if we were provided inaccurate information from our agent, whether intentionally or unintentionally?
Thanks!
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Re: back out of a real estate contract?
Need to know the bottom line. If I understand correctly, the agent waiving all their fee would save $40,000. You buyer also accepted your counter offer, so that means you’re selling at higher than listed, correct? So, compare your current offer net fees vs what you think you’d get if the agent had done correct comps (which you wouldn’t have gotten a fee discount for).
Sounds totally shady, but perhaps not as financially disadvantaged to you as it might first appear.
Sounds totally shady, but perhaps not as financially disadvantaged to you as it might first appear.
Re: back out of a real estate contract?
Are the breakup terms covered by the contract? It's been a long time since I bought a house, but I recall provisions in the contract for the penalties paid by anyone that backed out.
Re: back out of a real estate contract?
Was the agent also the broker? Does the broker have an incentive to make you whole?
I think the deal smells fishy. I’m not sure what the bottom line is on what $ you lost, but that agents needs to think about reimbursing the fee on the home you bought too.....
I think the deal smells fishy. I’m not sure what the bottom line is on what $ you lost, but that agents needs to think about reimbursing the fee on the home you bought too.....
Re: back out of a real estate contract?
Here’s my take. Take with a grain of salt.
I live in hot market. Builders are buying old homes and demolishing and building spec homes on them.
Why is a builder interested in your home? Will he be tearing it down? If so, you are not getting top dollar for your home.
Why is the realtor dropping his commission? Probably because after builder makes a new spec home or fixes/flips your home for a higher price, he will use your realtor who got him the lead in the first place.
Can you get out of your deal? I would think so. But consult your contract. Question is if it is worth the hassle? Only you can answer that
I live in hot market. Builders are buying old homes and demolishing and building spec homes on them.
Why is a builder interested in your home? Will he be tearing it down? If so, you are not getting top dollar for your home.
Why is the realtor dropping his commission? Probably because after builder makes a new spec home or fixes/flips your home for a higher price, he will use your realtor who got him the lead in the first place.
Can you get out of your deal? I would think so. But consult your contract. Question is if it is worth the hassle? Only you can answer that
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Re: back out of a real estate contract?
I am not an attorney or work in the real estate industry.
If you consulted with an attorney who knows the real estate law of your state, who actually reviewed the text of the contract and he/she says that there isn't a case to be had, then I am not sure that myself or any other random person on the Internet is going to offer any better opinion than the one you already received.
If you have doubts, you can always get a second opinion from another real estate attorney.
My only thought is that if the real estate agent also represents the builder, there could be "dual agency" issue. In many states dual agency is illegal. In other states, it is legal but must be disclosed. That could be an angle to pursue based upon what state you are in. However, perhaps your lawyer already thought of that and discarded that idea based upon your state, so don't get your hopes up.
If you consulted with an attorney who knows the real estate law of your state, who actually reviewed the text of the contract and he/she says that there isn't a case to be had, then I am not sure that myself or any other random person on the Internet is going to offer any better opinion than the one you already received.
If you have doubts, you can always get a second opinion from another real estate attorney.
My only thought is that if the real estate agent also represents the builder, there could be "dual agency" issue. In many states dual agency is illegal. In other states, it is legal but must be disclosed. That could be an angle to pursue based upon what state you are in. However, perhaps your lawyer already thought of that and discarded that idea based upon your state, so don't get your hopes up.
Re: back out of a real estate contract?
the fact that your agent is waiving all commissions definitely gives teh appearance of something shady. Unfortunately, unless you have some proof, if you back out of the deal, I'm guessing taht you still owe a commission (standard RE listing agreements).
Since a RE attorney already said that you have no case, chalk it up to experience: ALWAYS obtain at multiple written proposals before listing your house.
Since a RE attorney already said that you have no case, chalk it up to experience: ALWAYS obtain at multiple written proposals before listing your house.
Re: back out of a real estate contract?
Contact a real estate attorney. Don't mess around.
Re: back out of a real estate contract?
If a (real estate) attorney takes your case I would imagine the cost would be something like a contingency fee of 24% - 33% of the settlement proceeds you receive.
The closest helping hand is at the end of your own arm.
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Re: back out of a real estate contract?
Thanks a lot. I will try to answer all your questions here:
1. The buyer initially offered $20k below our planned listing price, and we countered with listing price. With the waived commission fee (6%), yes we have recovered around $50k from the potential loss. However, based on the recent sales, we could have gotten $50k more.
2. I looked through the contract, but it only allows a buyer to back out by giving up the earnest money. There is no clause that would allow a seller to back out -- lesson learned. Next time we sell a house, we will make sure that such clause is included.
3. The agent works for a real estate company, and is one of their top agents. Before this happens, we have very good relationship with him, as he has been helpful and patient when we were hunting for our current house. I am sure that if I file a complaint to BBB, the company may offer something for us. But we are not ready to take that route yet.
4. eagleeyes, you are spot on. We are in a very hot market, and the inventory is extremely low. Our house is in a prime location, and allows two houses built on the same lot. A builder can easily build and sell two $1.5 million houses. There is no clause in our contract for us to back out, and the builder is determined to close on our house. In retrospect, we can easily see that there is strong incentive for our agent to get a good deal for the builder, since they can hire him to list the new houses. Unfortunately we didn't see that during those couple of hours.
5. I did consult with one real estate attorney. We just briefly talked over the phone, and he didn't look at the contract, the comps or messages between our agent and us. The builder doesn't have an agent, so the agent very likely is a dual agent in this transaction. I can try to reach out to another real estate attorney. If our perceived loss is $50k, is it worthwhile to take this route if legal fees can easily exceed the difference. I never hired an attorney, so don't know how much the legal fee in cases like this will cost.
1. The buyer initially offered $20k below our planned listing price, and we countered with listing price. With the waived commission fee (6%), yes we have recovered around $50k from the potential loss. However, based on the recent sales, we could have gotten $50k more.
2. I looked through the contract, but it only allows a buyer to back out by giving up the earnest money. There is no clause that would allow a seller to back out -- lesson learned. Next time we sell a house, we will make sure that such clause is included.
3. The agent works for a real estate company, and is one of their top agents. Before this happens, we have very good relationship with him, as he has been helpful and patient when we were hunting for our current house. I am sure that if I file a complaint to BBB, the company may offer something for us. But we are not ready to take that route yet.
4. eagleeyes, you are spot on. We are in a very hot market, and the inventory is extremely low. Our house is in a prime location, and allows two houses built on the same lot. A builder can easily build and sell two $1.5 million houses. There is no clause in our contract for us to back out, and the builder is determined to close on our house. In retrospect, we can easily see that there is strong incentive for our agent to get a good deal for the builder, since they can hire him to list the new houses. Unfortunately we didn't see that during those couple of hours.
5. I did consult with one real estate attorney. We just briefly talked over the phone, and he didn't look at the contract, the comps or messages between our agent and us. The builder doesn't have an agent, so the agent very likely is a dual agent in this transaction. I can try to reach out to another real estate attorney. If our perceived loss is $50k, is it worthwhile to take this route if legal fees can easily exceed the difference. I never hired an attorney, so don't know how much the legal fee in cases like this will cost.
Re: back out of a real estate contract?
this sounds super shady.He provided us with a list of comps, where most of them are from last year, but he said that there are no comparable houses on the market....To my dismay, I found multiple comparable houses on the market, with a listing price around $50k more than ours.
This came to mind- https://www.nar.realtor/about-nar/gover ... nformation
REALTORS® are different from non-member licensees in that they voluntarily subscribe to a strict Code of Ethics. If you believe that a REALTOR® has violated one or more Articles of the Code of Ethics, you can file an ethics complaint alleging a violation(s) through the local association of REALTORS® where the REALTOR® holds membership...
Last edited by F150HD on Sun May 23, 2021 10:28 pm, edited 1 time in total.
Re: back out of a real estate contract?
That’s right. Your single house with its 50k commission is not what the realtor is after. He’s after the bigger fish, the 100k commission from the sale of the new houses the builder makes. Sounds like a musical city I know in TN.
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Re: back out of a real estate contract?
F150HD, thanks a lot for the link. I will look into it.
Re: back out of a real estate contract?
Even though it feels shady, you can look at this as if you’re getting the same price as if you sold during the height of covid.
Another thing to consider is if the cost on the new house was also obtained similar to the house you’re selling. In other words, if both houses could have sold for more, you were able to “upgrade” to the new house for the same cost difference.
Another thing to consider is if the cost on the new house was also obtained similar to the house you’re selling. In other words, if both houses could have sold for more, you were able to “upgrade” to the new house for the same cost difference.
Re: back out of a real estate contract?
Did you only interview the one real estate agent that you hired? If so, that was your first significant mistake. You should always interview several (at least three) real estate agents who will each prepare a list of comps, a proposed list price and a marketing plan. If you interviewed other agents in addition to the one you hired, what did they say about comps?noviceinre wrote: ↑Sun May 23, 2021 4:32 pm We recently hired a read estate agent to sell our house.
Is there anyway to back out of the contract if we were provided inaccurate information from our agent, whether intentionally or unintentionally?
Thanks!
As far as a way to "back out of the contract", it would be very unlikely that you have that remedy. If you wish to go down that path, I highly recommend that you consult with an experienced and trusted real estate lawyer. That lawyer can review your contract along with your information about how this transaction unfolded and advise you on your legal options. If you back out without the advice of a trusted and competent attorney, you assume the risk that the buyer will sue you. If that occurs, your legal expenses could be very significant and if the buyer seeks specific performance you could be prevented from selling the house until the litigation concludes.
Sorry for your difficulties, hope this works out.
Re: back out of a real estate contract?
You might try complaining to the manager/owner of the real estate agency. It can't do their other agents any good if one is known to be engaging in fraud.
Re: back out of a real estate contract?
You specifically talked with an attorney, presumably told them at least as much as you have written here, and you got advice. You should listen to this advice.noviceinre wrote: ↑Sun May 23, 2021 4:32 pmI know that we were very naive in this whole process, and are ready to accept and learn from this expensive lesson. I did talk to one attorney to see if we can get out of the contract, but he said that it is hard to approve there is anything going on between the agent and the builder, and not worthwhile going through the legal process.
It seems unlikely that anyone here could offer anything more than sympathy and the suggestion that you do your research before signing contracts in the future, rather than after.
Put this behind you and stop fretting. Perhaps you didn't get an optimal price, but you probably got a reasonable price anyway.
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: back out of a real estate contract?
You know you don't have to take offers your realtor presents to you. In fact, he is obliged to present you of any offers that he is presented by a buyer. If you're not interested then say so and move on with the listing of your house. Why not tell your realtor you prefer to list the house on the open market. And shift the conversation to pricing/selling/staging/open houses for your home. Given the hot market and what you know about your lot, make sure those selling points are factored into the price of the house and in the sales description.
Re: back out of a real estate contract?
Reject the offer.
Tell the agent, you want the house listed to see what the market will bring.
Tell the agent, you want the house listed to see what the market will bring.
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Re: back out of a real estate contract?
First, what clause would allow a Seller to cancel the contract after it was signed? Contingencies allow a Buyer to cancel it if they aren't met. Sellers don't have contingencies except as explained next.noviceinre wrote: ↑Sun May 23, 2021 9:58 pm Thanks a lot. I will try to answer all your questions here:
1. The buyer initially offered $20k below our planned listing price, and we countered with listing price. With the waived commission fee (6%), yes we have recovered around $50k from the potential loss. However, based on the recent sales, we could have gotten $50k more.
2. I looked through the contract, but it only allows a buyer to back out by giving up the earnest money. There is no clause that would allow a seller to back out -- lesson learned. Next time we sell a house, we will make sure that such clause is included.
3. The agent works for a real estate company, and is one of their top agents. Before this happens, we have very good relationship with him, as he has been helpful and patient when we were hunting for our current house. I am sure that if I file a complaint to BBB, the company may offer something for us. But we are not ready to take that route yet.
4. eagleeyes, you are spot on. We are in a very hot market, and the inventory is extremely low. Our house is in a prime location, and allows two houses built on the same lot. A builder can easily build and sell two $1.5 million houses. There is no clause in our contract for us to back out, and the builder is determined to close on our house. In retrospect, we can easily see that there is strong incentive for our agent to get a good deal for the builder, since they can hire him to list the new houses. Unfortunately we didn't see that during those couple of hours.
5. I did consult with one real estate attorney. We just briefly talked over the phone, and he didn't look at the contract, the comps or messages between our agent and us. The builder doesn't have an agent, so the agent very likely is a dual agent in this transaction. I can try to reach out to another real estate attorney. If our perceived loss is $50k, is it worthwhile to take this route if legal fees can easily exceed the difference. I never hired an attorney, so don't know how much the legal fee in cases like this will cost.
Second, the time to get a real estate lawyer is before you sign a contract, not after. A typical clause a Seller would add would give their lawyer 3 days to review a signed contract, and make any changes, which a Buyer would then have to accept or the contract is void. I put this is any contract that a lawyer has not reviewed prior.
If the real estate agent had this offer in his pocket when he gave the price recommendations to the Seller, that seems unethical.
Last edited by RickBoglehead on Mon May 24, 2021 7:41 am, edited 1 time in total.
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Re: back out of a real estate contract?
No way am I closing.
You can go about this several ways, but make clear to the agent you aren’t selling the house. Pick a reason, I’d probably use dual agency, which must at least be disclosed in (I think) every state.
Instead of “oh no they’ll sue me,” make them incur the legal fees to try to sue you. Their damages won’t be very much relative to the legal fees, to say nothing of the conduct of the realtor.
IANYL, not legal advice, etc.
You can go about this several ways, but make clear to the agent you aren’t selling the house. Pick a reason, I’d probably use dual agency, which must at least be disclosed in (I think) every state.
Instead of “oh no they’ll sue me,” make them incur the legal fees to try to sue you. Their damages won’t be very much relative to the legal fees, to say nothing of the conduct of the realtor.
IANYL, not legal advice, etc.
Re: back out of a real estate contract?
Lesson learned. The time to do this is before you list the property. At least have an idea of what you’d be happy with selling at.noviceinre wrote: ↑Sun May 23, 2021 4:32 pm
The whole thing makes me uncomfortable, so I decided to do some research. To my dismay, I found multiple comparable houses on the market, with a listing price around $50k more than ours. Some of them are sold at a price $100k more than our offer.
I recently sold a house and was presented with a similar pre-listing offer. My realtor told me I could probably make more if we listed it in the open market, but the offer was well above my number and waived all types of contingencies. I took it.
A year ago my number I’d be happy with was $100,000 less. So don’t feel too bad. Did you get more than you thought was ever possible last year?
Re: back out of a real estate contract?
At minimum, I'd share this story with the state and local real estate ethics boards. They may very well want to look into it and have disciplinary action.
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Re: back out of a real estate contract?
Who would ever buy from you if you have a clause that let's you back out if you see that some other similar house sold for more at some point before closing? Maybe a clause that let's you buy your way out, but even that seems unlikely.noviceinre wrote: ↑Sun May 23, 2021 9:58 pm 2. I looked through the contract, but it only allows a buyer to back out by giving up the earnest money. There is no clause that would allow a seller to back out -- lesson learned. Next time we sell a house, we will make sure that such clause is included.
Re: back out of a real estate contract?
FoolMeOnce wrote: ↑Mon May 24, 2021 7:33 amWho would ever buy from you if you have a clause that let's you back out if you see that some other similar house sold for more at some point before closing? Maybe a clause that let's you buy your way out, but even that seems unlikely.noviceinre wrote: ↑Sun May 23, 2021 9:58 pm 2. I looked through the contract, but it only allows a buyer to back out by giving up the earnest money. There is no clause that would allow a seller to back out -- lesson learned. Next time we sell a house, we will make sure that such clause is included.
Agreed..... that is not a reasonable clause in any way, and would never work. Don't sign a contract to sell your house if you don't want to sell your house. The realtor may have been a bit shady here.... but at the end of the day, the OP agreed to sell their house for $xxx....
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Re: back out of a real estate contract?
Thanks a lot for all your comments. Here is what I am thinking right now and please feel free to criticize or suggest:
1. From the builder's perspective, at least legally they did nothing wrong. They offered, we countered and they accepted the offer. They got a great deal and an ideal piece of land. Whether we hire an attorney or not, if they don't want to back out, I don't see any way to invalidate the contract.
2. Whether intention or not, our agent did provide us inaccurate information about the market, the inventory and listing status of other houses. We could complain to the company or the ethnics board.
3. Ultimately we are responsible for our decision, no matter how stupid it is. We did make multiple mistakes along the way, and I would like to learn from it. By sharing our experience here, I have learnt things we never thought of:
a. we should have talked to multiple agents before putting our house on the market
b. we should have a plan on how to market and sell the house, instead of blindly going to the market, being caught off guard by a seemingly good offer, and making an uninformed decision with it.
c. we should have done our own research no matter how much we trusted an expert/professional
d. consider adding attorney review clause into any contract
e. we made too many assumptions. We relied on anecdotal information, such our current house, or houses our friends/neighbors mentioned, to make assumption about our house value, instead of actually looking at the market data.
f. extreme risk aversion. Despite being in a hot market, we prefer a good enough but sure offer over any uncertainty in the market
g. we should have thought twice before making a hasty decision. Should have talked to someone who can force us to think through the pros and cons.
1. From the builder's perspective, at least legally they did nothing wrong. They offered, we countered and they accepted the offer. They got a great deal and an ideal piece of land. Whether we hire an attorney or not, if they don't want to back out, I don't see any way to invalidate the contract.
2. Whether intention or not, our agent did provide us inaccurate information about the market, the inventory and listing status of other houses. We could complain to the company or the ethnics board.
3. Ultimately we are responsible for our decision, no matter how stupid it is. We did make multiple mistakes along the way, and I would like to learn from it. By sharing our experience here, I have learnt things we never thought of:
a. we should have talked to multiple agents before putting our house on the market
b. we should have a plan on how to market and sell the house, instead of blindly going to the market, being caught off guard by a seemingly good offer, and making an uninformed decision with it.
c. we should have done our own research no matter how much we trusted an expert/professional
d. consider adding attorney review clause into any contract
e. we made too many assumptions. We relied on anecdotal information, such our current house, or houses our friends/neighbors mentioned, to make assumption about our house value, instead of actually looking at the market data.
f. extreme risk aversion. Despite being in a hot market, we prefer a good enough but sure offer over any uncertainty in the market
g. we should have thought twice before making a hasty decision. Should have talked to someone who can force us to think through the pros and cons.
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Re: back out of a real estate contract?
I disagree with bolded as the RE contract likely has a provision permitting the non-breaching party to collect attorney fees not to mention OP will unlikely be able to sell the house during the pendency of the litigation. OP already consulted with an attorney so to the extent there is a dual agency here it would appear that such an issue does not void the contract.BillWalters wrote: ↑Mon May 24, 2021 6:52 am No way am I closing.
You can go about this several ways, but make clear to the agent you aren’t selling the house. Pick a reason, I’d probably use dual agency, which must at least be disclosed in (I think) every state.
Instead of “oh no they’ll sue me,” make them incur the legal fees to try to sue you. Their damages won’t be very much relative to the legal fees, to say nothing of the conduct of the realtor.
IANYL, not legal advice, etc.
Re: back out of a real estate contract?
Very wise perspective and insight! That will serve you well in the future.noviceinre wrote: ↑Mon May 24, 2021 9:56 am Thanks a lot for all your comments. Here is what I am thinking right now and please feel free to criticize or suggest:
1. From the builder's perspective, at least legally they did nothing wrong. They offered, we countered and they accepted the offer. They got a great deal and an ideal piece of land. Whether we hire an attorney or not, if they don't want to back out, I don't see any way to invalidate the contract.
2. Whether intention or not, our agent did provide us inaccurate information about the market, the inventory and listing status of other houses. We could complain to the company or the ethnics board.
3. Ultimately we are responsible for our decision, no matter how stupid it is. We did make multiple mistakes along the way, and I would like to learn from it. By sharing our experience here, I have learnt things we never thought of:
a. we should have talked to multiple agents before putting our house on the market
b. we should have a plan on how to market and sell the house, instead of blindly going to the market, being caught off guard by a seemingly good offer, and making an uninformed decision with it.
c. we should have done our own research no matter how much we trusted an expert/professional
d. consider adding attorney review clause into any contract
e. we made too many assumptions. We relied on anecdotal information, such our current house, or houses our friends/neighbors mentioned, to make assumption about our house value, instead of actually looking at the market data.
f. extreme risk aversion. Despite being in a hot market, we prefer a good enough but sure offer over any uncertainty in the market
g. we should have thought twice before making a hasty decision. Should have talked to someone who can force us to think through the pros and cons.
You may wish to change your username accordingly...
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Re: back out of a real estate contract?
Thanks a lot for the encouragement. I still have regrets, but will try to focus on what we have and be a little bit wiser in the future.
Re: back out of a real estate contract?
I'd talk to the Listing company the agent works for first... but let them know that if not satisfied you'll file a formal complaint with the ethics board (if you are willing to do that)2. Whether intention or not, our agent did provide us inaccurate information about the market, the inventory and listing status of other houses. We could complain to the company or the ethnics board
State your case clearly, agent did not give you the proper info, never listed the house, brought in the builder, based on their advice you accepted a below market offer. You need to have something specific in mind you want them to do (waive the rest of the commission?) to help you get a better result. Let them know you'll also post reviews on every social media platform you can laying out the issues with the agent. Hopefully they will be inspired to help close the gap a bit, as noted above they have their eye on the prize down the road
Mike
Re: back out of a real estate contract?
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Last edited by J295 on Mon May 24, 2021 5:03 pm, edited 1 time in total.
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Re: back out of a real estate contract?
You agreed to sell at a price so why backout now ?
Even if the agent has a buyer lived up before he signed with you, you cannot access that buyer so it is moot for me.
When you sell your home did you not have a ballpark $$$ in mind
Even if the agent has a buyer lived up before he signed with you, you cannot access that buyer so it is moot for me.
When you sell your home did you not have a ballpark $$$ in mind
Invest when you have the money, sell when you need the money, for real life expenses...
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- Location: Iowa
Re: back out of a real estate contract?
Unless you used something other than a commonplace house selling contract, your options are very limited. If you back out of the contract, the buyer can sue you and you will be forced to sign over the deed by a judge. Although not common, you could be sued for damages buyer incurred by you backing out of the contract. I have heard of sellers PAYING the buyer to back out of contracts when another bigger offer comes in but it doesn't sound like you have another offer and what you declare as a similar comp may not be in the eyes of a professional. Another tool in the buyers favor is they can place a lien on your property if you back out forcing you to settle the issue in court before it can be sold to anyone else.noviceinre wrote: ↑Sun May 23, 2021 4:32 pm Any advice from the wise bogleheads community before we just throw in the towel? Is there anyway to back out of the contract if we were provided inaccurate information from our agent, whether intentionally or unintentionally?
It sounds shady but might be impossible to prove. Unfortunately, I think in this case you just have to take your lumps for not doing due diligence of getting an independent appraisal ahead of time.
Re: back out of a real estate contract?
If the real estate agent did in fact do something unethical, or even illegal like fail to disclose, does that have an effect on the contract itself? Since the other party to the contract is the builder, could the contract ever be invalidated based on this unethical/illegal activity, or would the only recourse be against the agent?
Made money. Lost money. Learned to stop counting.
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- Joined: Sun May 23, 2021 3:11 pm
Re: back out of a real estate contract?
Thanks a lot for the detailed advice. I will keep that in mind if we decide to take this route. Not ready to go against him yet, if the whole thing is unintentional.fabdog wrote: ↑Mon May 24, 2021 3:47 pm
I'd talk to the Listing company the agent works for first... but let them know that if not satisfied you'll file a formal complaint with the ethics board (if you are willing to do that)
State your case clearly, agent did not give you the proper info, never listed the house, brought in the builder, based on their advice you accepted a below market offer. You need to have something specific in mind you want them to do (waive the rest of the commission?) to help you get a better result. Let them know you'll also post reviews on every social media platform you can laying out the issues with the agent. Hopefully they will be inspired to help close the gap a bit, as noted above they have their eye on the prize down the road
Mike
- dogagility
- Posts: 3237
- Joined: Fri Feb 24, 2017 5:41 am
Re: back out of a real estate contract?
OP, you've learned some good house selling practices here. Just sharing our experience that putting the house on the open market in a seller's market is likely to yield the best offer.
Closed on our SFH a couple of weeks ago.
Our agent was also the buyer's agent for a family jonesing to get into our neighborhood.
This buyer wanted to tour the house as soon as we signed with the agent and prior to listing on the MLS. We said no.
House went on the open market. This buyer submitted an offer along with offers from other buyers. Their offer was well above the offers of the others and with no contingencies. We accepted the offer.
Was the buyer's offer higher than it would have been prior to listing the house? We won't ever know for sure, but it's likely. Competition for a valuable asset tends to drive up the selling price.
We had no concerns that our house wouldn't sell. So, it was an easy decision to wait and not accept any offer pre-listing.
Our agent was also exemplary during the entire process. Was very helpful, provided timely communication, and did not favor one party although was a dual agent for the ultimate transaction.
Closed on our SFH a couple of weeks ago.
Our agent was also the buyer's agent for a family jonesing to get into our neighborhood.
This buyer wanted to tour the house as soon as we signed with the agent and prior to listing on the MLS. We said no.
House went on the open market. This buyer submitted an offer along with offers from other buyers. Their offer was well above the offers of the others and with no contingencies. We accepted the offer.
Was the buyer's offer higher than it would have been prior to listing the house? We won't ever know for sure, but it's likely. Competition for a valuable asset tends to drive up the selling price.
We had no concerns that our house wouldn't sell. So, it was an easy decision to wait and not accept any offer pre-listing.
Our agent was also exemplary during the entire process. Was very helpful, provided timely communication, and did not favor one party although was a dual agent for the ultimate transaction.
Make sure you check out my list of certifications. The list is short, and there aren't any. - Eric 0. from SMA
- MillennialFinance19
- Posts: 586
- Joined: Sat Feb 09, 2019 10:06 am
Re: back out of a real estate contract?
If it's me, I'm requesting a meeting with the broker. I would lay out the case and how "unethical" it seems. This should get you some concessions.
VTI and chill until 57...
Re: back out of a real estate contract?
This is outrageous. You should meet with another lawyer for a second opinion. You may be able to void the contract due to the material misrepresentations by the broker which induced you to enter into the transaction. (I’m not a lawyer, but have been in commercial real estate finance for decades)
And you should scream bloody murder about the broker – meet with his company, call his boss, file an ethics complaint, hit social media, and make sure that everyone is apprised of his deceitful ways.
If not, he will be empowered to pull the same tricks on the next unsuspecting customer.
And you should scream bloody murder about the broker – meet with his company, call his boss, file an ethics complaint, hit social media, and make sure that everyone is apprised of his deceitful ways.
If not, he will be empowered to pull the same tricks on the next unsuspecting customer.
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- Posts: 8
- Joined: Sun May 23, 2021 3:11 pm
Re: back out of a real estate contract?
Thanks a lot for sharing your experience. I wished we were as clear headed as you were. We obviously made a decision on intuition instead of reasoning.dogagility wrote: ↑Tue May 25, 2021 6:02 am OP, you've learned some good house selling practices here. Just sharing our experience that putting the house on the open market in a seller's market is likely to yield the best offer.
Closed on our SFH a couple of weeks ago.
Our agent was also the buyer's agent for a family jonesing to get into our neighborhood.
This buyer wanted to tour the house as soon as we signed with the agent and prior to listing on the MLS. We said no.
House went on the open market. This buyer submitted an offer along with offers from other buyers. Their offer was well above the offers of the others and with no contingencies. We accepted the offer.
Was the buyer's offer higher than it would have been prior to listing the house? We won't ever know for sure, but it's likely. Competition for a valuable asset tends to drive up the selling price.
We had no concerns that our house wouldn't sell. So, it was an easy decision to wait and not accept any offer pre-listing.
Our agent was also exemplary during the entire process. Was very helpful, provided timely communication, and did not favor one party although was a dual agent for the ultimate transaction.
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- Posts: 8
- Joined: Sun May 23, 2021 3:11 pm
Re: back out of a real estate contract?
You got my hopes up. So it is possible to void a contract even if the other party is not at fault (assuming it is difficult to prove there is anything going on between the agent and the buyer), and there is no misrepresentation about the house itself on the contract? I do plan to talk to another attorney to get a second opinion about it.Jaylat wrote: ↑Tue May 25, 2021 1:02 pm This is outrageous. You should meet with another lawyer for a second opinion. You may be able to void the contract due to the material misrepresentations by the broker which induced you to enter into the transaction. (I’m not a lawyer, but have been in commercial real estate finance for decades)
And you should scream bloody murder about the broker – meet with his company, call his boss, file an ethics complaint, hit social media, and make sure that everyone is apprised of his deceitful ways.
If not, he will be empowered to pull the same tricks on the next unsuspecting customer.
Re: back out of a real estate contract?
Whether you can void that transaction or not (seems very unlikely), you should raise holy hell against the agent and the company he works for. It is pretty clear that he defrauded you. His lack of professional care made you make a very costly mistake. You can still be made whole by the agent and the company he works for. He didn't just waive $50k in commissions because he is a nice guy; he did it because he knows he did wrong and faces significant exposure. Hire a bulldog of an attorney and go after the agent and the company he works for. Report him to all licensing and relevant boards. You were very naive in how you approached this sale, but that doesn't remove the fact that the agent acted way out of bounds to professional standards.noviceinre wrote: ↑Tue May 25, 2021 3:38 pmYou got my hopes up. So it is possible to void a contract even if the other party is not at fault (assuming it is difficult to prove there is anything going on between the agent and the buyer), and there is no misrepresentation about the house itself on the contract? I do plan to talk to another attorney to get a second opinion about it.Jaylat wrote: ↑Tue May 25, 2021 1:02 pm This is outrageous. You should meet with another lawyer for a second opinion. You may be able to void the contract due to the material misrepresentations by the broker which induced you to enter into the transaction. (I’m not a lawyer, but have been in commercial real estate finance for decades)
And you should scream bloody murder about the broker – meet with his company, call his boss, file an ethics complaint, hit social media, and make sure that everyone is apprised of his deceitful ways.
If not, he will be empowered to pull the same tricks on the next unsuspecting customer.
- lthenderson
- Posts: 8528
- Joined: Tue Feb 21, 2012 11:43 am
- Location: Iowa
Re: back out of a real estate contract?
I think a lot of people are putting a lot of faith in the the fact that the OP thinks their comp estimate proves that they would have gotten more money in the sale. Comps are not simply finding a house nearby that is same size and style and noting the price it sold for. It is also knowing the neighborhood trends, market trends, etc. Just because a similar house can be found in neighborhood X doesn't mean it equals the same value as an identical house in neighborhood Y. Does the OP know what concessions were made during the sale of the houses they are using as comps? That effects the overall price but doesn't necessarily reflect value. Does the OP know if the houses selected for comps were on dead end cul-de-sacs or busy roads? That can affect the price significantly. Does the OP know all the interior finishes of houses used as comps? Does the OP know the reason the people purchased the house? Might not a person looking for a house just down the block from aging parents pay a lot more for the house to insure they get it over someone buying it with the knowledge they have a long daily commute if they get it? All the comps I have received in the past have a section where they add or subtract value to the comp to actually be equivalent to my house depending on all the above and more. Did the OP do all those things?
I'm hoping the OP updates this post with what comes of this. My guess is because there seems to be no proof of any wrong doing, just a lot of assumptions, that the transaction will go through as contracted and the OP learns some valuable lessons.
I'm hoping the OP updates this post with what comes of this. My guess is because there seems to be no proof of any wrong doing, just a lot of assumptions, that the transaction will go through as contracted and the OP learns some valuable lessons.
Re: back out of a real estate contract?
I wouldn't get your hopes up based upon the opinion(s) of one or more well-meaning Bogleheads who are not educated, trained or authorized to give you legal advice. By all means, seek a second legal opinion from a competent and experienced attorney but be cautious not to throw good money after bad. I have seen litigants who, often based upon unsound advice, pursue a case which has minimal chance of success, frequently spending more on legal fees than they could ever hope to recover.noviceinre wrote: ↑Tue May 25, 2021 3:38 pmYou got my hopes up. So it is possible to void a contract even if the other party is not at fault (assuming it is difficult to prove there is anything going on between the agent and the buyer), and there is no misrepresentation about the house itself on the contract? I do plan to talk to another attorney to get a second opinion about it.Jaylat wrote: ↑Tue May 25, 2021 1:02 pm This is outrageous. You should meet with another lawyer for a second opinion. You may be able to void the contract due to the material misrepresentations by the broker which induced you to enter into the transaction. (I’m not a lawyer, but have been in commercial real estate finance for decades)
And you should scream bloody murder about the broker – meet with his company, call his boss, file an ethics complaint, hit social media, and make sure that everyone is apprised of his deceitful ways.
If not, he will be empowered to pull the same tricks on the next unsuspecting customer.
IANYL but just based upon the facts asserted in your post and without having reviewed the document itself, I don't see a viable 'pain-free" way to terminate the contract. Remember, the contract is between you and the buyer, not you and the realtor. You would likely be required to prove that the buyer is legally liable for any alleged misconduct of the realtor AND that this alleged misconduct is a sufficient legal defense to the validity of the contract. Could you challenge the contract or attempt to terminate it? Certainly. Will it potentially cost you more in attorneys' fees than any potential diminished net sale proceeds? Very possibly. Good luck.
Re: back out of a real estate contract?
Is it possible he/she waived commission because he already got a really nice one when you purchased the other house with him/her?