In an earlier post I had mentioned a short list (but with longer explanations) of reasons why it is important to know how your agent handles documents and their thoroughness in reading them. Much of that article was based on my working with a young couple who is buying a townhome in the Greenwood area (details not included to protect the privacy of all parties) and I wrote in that article about details on our side of the transaction. Well, today opened up some new details that are quite interesting from the seller side and they should also be examined in a forum like this one.
So, here are 4 more important reasons to test your agent’s reading skills….
1. So you don’t lose money – sometimes more than twice in one transaction. We had had our first offer countered to a $10k under list price but then it was rescinded when the seller decided they wanted my buyers to do a pre-inspection. We’d already lowballed the offer by $15,000 so we weren’t surprised that they’d asked us to do this. For $400 out of pocket to save $10-15k, it was worth doing in advance plus the client had a guarantee from us that if the deal failed we’d credit them the amount of the inspection fee at their next closing.
Once we completed the pre-inspection we wrote up a new offer and put our $15,000 under list price on the front page of the purchase and sale agreement BUT in the financing addendum we ADDED a 3% closing cost credit that the seller would pay the buyer at closing.
When we first sent this new offer in I told my buyer clients that we weren’t going to draw attention to the 3% to the listing agent as we wanted to see if he would notice it or not. Well, he didn’t. And neither did his sellers. The seller signed off on it and we were under mutual acceptance :). Score one for my clients to the tune of just under $8k on top of the $15k under asking price.
The big bonus in all of this is that the appraisal came in at $10k OVER the list price. Niiiiiiiiiice! We love deals like this one when we can get them for our clients.
2. So you don’t have to sue or mediate with your agent. – The listing agent (LA) told me today that his clients are now aware of the 3% element and they are threatening to sue him and/or his broker. Listing agreements are actually with a broker and they “assign” an agent, likely the person that you interviewed. The seller can’t change the terms with my clients because they agreed to it in writing and didn’t balk at it at the time. They did, however, ask the LA at the time of the 2nd offer submission if there had been any changes in our offer and he said that there were none. They also didn’t have a super clear copy of the contract in their hands (so I’m told) and they didn’t see it.
In my personal opinion, the LA should forfeit any commission he was to have been paid to appease his clients. If his commission percentage isn’t enough to cover the full 3% his clients are losing then he might be able to work out a deal with his broker and then pay them back via commissions earned on other transactions. Based on current MLS data he has 5 other properties either active or in pending contracts besides this one.
3. So you don’t put yourself in the position of possibly being sued yourself. – The seller is in a position that if they try to back out at this stage of the deal they could find themselves in a potential lawsuit from my buyers. This is not a great position to be in and I’m sure they feel pressed up against a wall. Without being an attorney, and only going from anecdotal experience here, my understanding is that my clients would need to file a lis pendens against the property which would limit the seller’s ability to list the house for sale again. They would then move forward with a suit for specific performance to attempt to get the seller to move forward with the final transfer of ownership by force through the judicial process.
4. So your don’t feel “screwed” at the end of the transaction. I feel for these sellers. They’re already in a dire and potentially complex emotional situation since they are in the middle of a divorce. Now they are likely feeling like they’ve been betrayed by a professional who is supposed to be looking out for their interests.
As for me and the buyers, I’ve got to look out for the best interests of my clients and so far that seems to be working out well for them. Even though the place needs work, they’ll end up feeling like they got a good deal, and they are.
