Wanting to see if it's a common thing happening now. Neighbors under contract to sell their house to an investor and they are paying cash. Night before closing day get a call saying investor did math wrong for taxes and max they can now pay is $32k below original agreed upon price. Same investor bought another house around corner and did same thing to that home owner but was only $12k, they came to some sort of agreement. Our neighbors told them to pound sand but obviously frustrated bc they were already under contract for another house and had moved 95% of belongings 4 hours away and had to back out of that purchase. To me sounds like a business tactic of the investor hoping the seller is in bad enough spot they have to take the new offer since was night before closing.
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Investor Dropping Price
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Last: 3 yr ago by Unnecessary Deafness
I'm confused about this contract.
Sue for performance?
Sometimes it's the principal of things
Sue for performance?
Sometimes it's the principal of things
Lots of shady people out there. Did the investor have a buyer's agent?
Yes they did not sure who though. Which surprises me that a realtor/agency would put up with that kind of nonsense and agree to represent them like that. Same investor put in offer on another house right across the street but the selling agency is same for other two houses and said he wasn't even going to entertain them with this 3rd house.
Happens frequently on the commercial side. Generally frowned upon and avoided by sophisticated shops to avoid reputational damage, but sometimes it's unavoidable due to changed circumstances (lately, financing being significantly more expensive than when the purchase contract was originally inked)
ETA: but I've never seen a retrade for "oops we screwed up the math." That sounds like BS to me
ETA: but I've never seen a retrade for "oops we screwed up the math." That sounds like BS to me
Investor was probably a wholesaler. Got the house under contract and then shopped it to other investors. They had no intention of closing on it.
I guess we all need to stop selling to investors. Sell to other individuals. I'm starting to hate these investor companies that buy up all the houses.
Can you make the earnest money requirement higher for investors?
That's our neighbors next concern is getting earnest money. My wife and I still have earnest money being held from 3 years ago bc the original buyers of our previous house got furloughed 24 hours before closing and funding fell through. They are refusing to release it to us so it's just sitting with state of Texas. It's bull**** that buyers have to agree to release the funds to sellers when they had issues on their end.
a07nathanb said:
Sue for performance?
Anyone have experience with this?
Does the contract list SP as a seller remedy? Would be quite unusual IMO
South Platte said:
I guess we all need to stop selling to investors. Sell to other individuals. I'm starting to hate these investor companies that buy up all the houses.
I would love to buy investment homes for a good price for my own personal portfolio but I sure can't find deals that I have been hoping for. Haven't been able to get a house under contract yet and the interest rates have skyrocketed since I started trying so another strike for being able to get it done.
not uncommon at all. This is from the Texas Real Estate Commission contractGoldie Wilson said:
Does the contract list SP as a seller remedy? Would be quite unusual IMO
Diggity said:not uncommon at all. This is from the Texas Real Estate Commission contractGoldie Wilson said:
Does the contract list SP as a seller remedy? Would be quite unusual IMO
Within my family, we have been on both sides of this in Texas. My parents were under contract with a house being purchased from from a lawyer and wanted out a couple of weeks before closing but after the option period. They said "here's your earnest money, we've changed our mind." She said "You'll but this house or I'll personally sue you."
My dad is pretty risk averse and his lawyer told him that she probably wouldn't win, it would cost my dad a lot of money and the home owner/lawyer would make it really expensive regardless of the results. There was nothing wrong with the house worth fighting over so my parents just bought it under the threat of "specific performance".
On the other side of it, we had somebody back out 3 days before closing. It was 4th time we had been under contract for this house and had it not go through so I was pissed (no solid reasons in any of the cases imo). We had already moved by this point.
So I called Joel Bailey (great Aggie Lawyer btw if you need somebody in DFW) and we were ready to rock and make this ******* buy my house…except that the title company hadn't renewed the form for the HOA policy. We had done it originally when we first tried to close with a different buyer and it cost some amount of money to get the HOA form. Well they expire after 3 months and the title company didn't get it renewed for this particular closing giving the buyer a contractual out.
Joel (to appease me) sent a letter but he felt like our case could be successful but it would be costly. He recommended me to drop it, which I appreciate a lawyer turning down business for my benefit.
Based on what was posted in the op, I would say specific performance would definitely apply. You can't just not buy the house because it's more than you thought it was going to be. The buyer broke a contract and most contracts have consequences when broken.
right...as your experience showed, .it's a remedy that the contract (usually) provides for, but that doesn't mean it will be easy/cheap to enforce.RikkiTikkaTagem said:Diggity said:not uncommon at all. This is from the Texas Real Estate Commission contractGoldie Wilson said:
Does the contract list SP as a seller remedy? Would be quite unusual IMO
Within my family, we have been on both sides of this in Texas. My parents were under contract with a house being purchased from from a lawyer and wanted out a couple of weeks before closing but after the option period. They said "here's your earnest money, we've changed our mind." She said "You'll but this house or I'll personally sue you."
My dad is pretty risk averse and his lawyer told him that she probably wouldn't win, it would cost my dad a lot of money and the home owner/lawyer would make it really expensive regardless of the results. There was nothing wrong with the house worth fighting over so my parents just bought it under the threat of "specific performance".
On the other side of it, we had somebody back out 3 days before closing. It was 4th time we had been under contract for this house and had it not go through so I was pissed (no solid reasons in any of the cases imo). We had already moved by this point.
So I called Joel Bailey (great Aggie Lawyer btw if you need somebody in DFW) and we were ready to rock and make this ******* buy my house…except that the title company hadn't renewed the form for the HOA policy. We had done it originally when we first tried to close with a different buyer and it cost some amount of money to get the HOA form. Well they expire after 3 months and the title company didn't get it renewed for this particular closing giving the buyer a contractual out.
Joel (to appease me) sent a letter but he felt like our case could be successful but it would be costly. He recommended me to drop it, which I appreciate a lawyer turning down business for my benefit.
Based on what was posted in the op, I would say specific performance would definitely apply. You can't just not buy the house because it's more than you thought it was going to be. The buyer broke a contract and most contracts have consequences when broken.
In this case though, wouldn't it be just as expensive for the investor to fight back in court, and wouldn't he probably loose?
So they'd do the same "cost of legal battle analysis" and decide it was cheaper to buy the house. If it looks like they're going to really fight, the seller would drop the suit.
So they'd do the same "cost of legal battle analysis" and decide it was cheaper to buy the house. If it looks like they're going to really fight, the seller would drop the suit.
So question for my own sake now regarding Specific Perfomance. When my wife and I were selling our house 3 years ago right when Covid crap started the buyers couldn't close due to wife being furloughed from hospital and she was the money maker (funding was declined.). We had to relist and move on, we have yet to get the earnest money out down by the purchaser. Their realtor tried to sneak in a document that we would release all earnest money back to them but I caught it before signing. The purchasers refused to release the money to us because they felt since she was furloughed due to Covid they should get it back. There was no added verbiage releasing them of anything if got laid off due to Covid. Our realtor said we're SOL if they won't sign docs to release earnest money to us. So we still haven't seen that money and it's apparently sitting with state of TX just making them money.
it's a game of chicken. Seller can't re-list the house until the situation is resolved so seasoned investor is betting the seller won't want to mess with a protracted (and possibly expensive) battle.K_P said:
In this case though, wouldn't it be just as expensive for the investor to fight back in court, and wouldn't he probably loose?
So they'd do the same "cost of legal battle analysis" and decide it was cheaper to buy the house. If it looks like they're going to really fight, the seller would drop the suit.
Yeah not saying I'd sue some average family who just decided to balk, but I feel like the game of chicken might be win-able against a cash buyer investor (who most likely has the cash to perform)
Oh he does, the sellers agent was able to verify funds of over $1 mil in bank account as part of documentation so he wasn't hurting or didn't overextend himself.
I can't imagine specific performance actually ever ultimately working. Especially when you're dealing with shifty characters to begin with.
it's a tough battle to win for sure.
From what I have heard, even if the buyer can't find some technicality to exit the contract on, the judge may decide the earnest money is suitable relief.
From what I have heard, even if the buyer can't find some technicality to exit the contract on, the judge may decide the earnest money is suitable relief.
...and getting a Judgment for specific performance (if you can get one) and enforcing it are 2 different things.
That's all I want is for the earnest money to be given to us it's been 3 years now
This is just another example of how the real estate system relies on so much good faith. In my opinion, option money is too low, earnest money especially on a cash deal is too low, leasing a home back to the seller for 60 days with no deposit is a problem waiting to happen, I can go on and on.
Option money should be closer to .5 to 1% of the purchase price. Buyers, especially in normal markets, are just locking things up with hope of renegotiating during the option period. Dallas had $100 options for the longest time even on multiple million dollar properties. Sellers were taking options from people that haven't even viewed the house.
Earnest money should be high enough that you can move completely out and back in plus the time and effort. If someone can't muster that amount, you are going to have problems closing anyways.
Option money should be closer to .5 to 1% of the purchase price. Buyers, especially in normal markets, are just locking things up with hope of renegotiating during the option period. Dallas had $100 options for the longest time even on multiple million dollar properties. Sellers were taking options from people that haven't even viewed the house.
Earnest money should be high enough that you can move completely out and back in plus the time and effort. If someone can't muster that amount, you are going to have problems closing anyways.
neat ideas...if you want to never sell your house.
Diggity said:
neat ideas...if you want to never sell your house.
I am fine running off buyers that balk at a $1000 option or $10,000 in escrow when they claim they are paying cash. Sometimes it is better to find out at the front end.
it would be more like $2-4K option fees for a typical home (and higher in many markets).
The seller has the right to keep that money for any reason. Any buyer that agrees to that is foolish.
The EMC makes a point of calling the option fee "nominal"
The seller has the right to keep that money for any reason. Any buyer that agrees to that is foolish.
The EMC makes a point of calling the option fee "nominal"
I'm not sure I understand. Every time we've purchased property, or sold property, the earnest money was escrowed to the title company ( I believe) and contractually the seller's unless contingency clauses kick in. How can the buyer "not release" it for you to keep?
The buyers funding fell through 24 hours prior to closing due to wife being furloughed. We have been/were told by our realtor that until the seller signs off to release funds to us then we can't receive the earnest money the buyers put down. Our realtor sent us paperwork to sign but I read through it and it was us releasing the earnest money back to them so refused to sign it. We were told there was no Covid clause or anything but nothing we could do to receive funds unless we agreed upon some sort of split of the earnest money.
Yeah the realtors will correct me if I'm wrong but I believe the buyer still has to sign to release funds. Title companies won't risk it otherwise.
This is correct I had a person buying one of my lots and he kept delaying closing, but still giving me incentive to extend it for a price.MAS444 said:
Yeah the realtors will correct me if I'm wrong but I believe the buyer still has to sign to release funds. Title companies won't risk it otherwise.
My realtor after he came back for another 15 day extension recommended having the person Venmo me directly 5k additionally to the on top of sale price, because if he backed out the odds are he would never release the earnest money and this would allow me to recoup something.
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