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Ever had an uneasy feeling when negotiating a purchase that made you pull the offer?

Sherilynn

Sherilynn

Real Estate Maven
REIN Member
Joined
Oct 22, 2007
Messages
2,798
Greetings.



I am about to pull an offer off the table because of an uneasy feeling, and I just want to know if I am being ridiculous. I have never canceled an offer before, but I have also never had an uneasy feeling in any of our other purchases.



The timing is tight. 7 business days for condition removal (but I will only be in Canada for 5 of those days), and closing in 26 days (again, I'll be gone for half that). I checked with my team to be sure it was possible; however delays can happen (especially with banks) so there was no guarantee we could close on time. This is where it gets weird.



The seller asked for a 5 business day condition period and an 18 day closing. We said it was impossible for us, even if I was in the country the entire time. We managed to get him to agree to our original dates, but the degree of difficulty in contacting the realtor and seller, plus the seller's attitude, plus the fact that the seller insisted on higher deposits made me closely examine the worst-case scenario.



I imagined complications causing delays in closing, but in this case I imagined the seller being unwilling to accept the late closing. According to the contract, the seller "may, but is not obligated to accept late payment." So basically if we can't close on time he can keep our deposits and say "seeya."



We agreed to the larger deposits if we could either extend the closing or remove the "but is not obligated" from the contract. The seller supposedly contacted his lawyer on a Sunday and she explained the contract to us, conveniently leaving out the part about what happens if the seller will not accept the late closing. Not reassuring.



Just to add to my uneasiness, the seller's name doesn't appear on the contract. Even when they sent the counteroffer, it was all in the name of the realtor.



Am I being paranoid because we are going on holidays? Or would this push anyone else's "uneasy" button?
 
I don't think the seller can go back on a contract because you needed a few extra days...

That's not reasonable. Usually, the lawyers will account for delays here and there. So I don't think he can keep your deposit due to a few days that you need.



But simply amend the contract to state ," Subject to lawyer's aproval".





Kir.
 
Actually, the seller can. If the buyer cannot close as agreed, then the buyer has breached the contract, and the seller can void the contract and keep the deposits as liquidated damages. Normally if the buyer can't close in time the seller will allow the extra days at a premium interest rate (as stated in the standard contract) but the seller is not required by the contract to allow the extra time.



This is standard in the AREA contract, so having a lawyer review it won't help. Also, I am referring to closing, so we would be past the condition date.



The issue here is that it almost feels as though the seller is hoping we will default. He is pressing for tighter dates and higher deposits.



I have heard about RTO scams where the seller sets the buyer up for failure, then keeps the deposits and lease options the property to another buyer. Who is to say there aren't people trying the same thing with conventional sales?
 
There is enough real estate around to buy under your terms. Follow your instincts there is always another bus coming.
 
I think it is important to feel confident about the purchase and that the people you are dealing with are on the up and up. If your "spidey senses" are going off, maybe you should re-evaluate the deal. Like Alvaro said above, there are other deals to be had that fit your comfort level.
 
[quote user=Sherilynn]The timing is tight. 7 business days for condition removal (but I will only be in Canada for 5 of those days), and closing in 26 days (again, I'll be gone for half that). I checked with my team to be sure it was possible; however delays can happen (especially with banks) so there was no guarantee we could close on time.


This is the timeline I am writing for standard retail buy/sell work right now. If you have a lot of funky conditions that may cloud your situation then more time may be required, however if the seller is receiving interest from a 'normal' buyer then then is usually enough time to get this done. Financing is always the hold up, and lately it's been with the insurers not the lenders. Ask your mortgage broker what significant hurdles you face in order to receive an unconditional commitment letter from a lender that will also be insuring your deal. WRT closing in 26 days - bank financing should be no problem. It would only matter if you can't get the downpayment together in time. Don't waive your financing condition until you are 100% you can pay for the property in time.



[quote user=Sherilynn]I imagined complications causing delays in closing, but in this case I imagined the seller being unwilling to accept the late closing. According to the contract, the seller "may, but is not obligated to accept late payment." So basically if we can't close on time he can keep our deposits and say "seeya."


If you truly suspect you may not be able to close in time then you need to get yourself some leeway in the contract that provides for a late closing. Removing the term you've suggested or perhaps amending other ones. It's ok to get creative.. maybe if you don't close on time the price jumps $1k/week to a maximum of 10 weeks or something like that. You need to explain why you are proposing this to the seller and get him to understand why a 26 closing period will be a challenge for you. It helps if you make can him part of the problem: IE he is late getting his RPR together, his house is old and a satisfactory appraisal isn't guaranteed, or there are issues with insurability etc. If you or your agent explain it well he will see that these issues will be present irregardless of which buyer he is working with so why not work with you and your timelines as it's most likely the fastest path to the money for him.



[quote user=Sherilynn]The seller supposedly contacted his lawyer on a Sunday and she explained the contract to us, conveniently leaving out the part about what happens if the seller will not accept the late closing. Not reassuring.




Why is the seller's lawyer giving you advice and more importantly why are you taking it? Get advice from your realtor or lawyer, not anyone from the seller's side.



[quote user=Sherilynn]Just to add to my uneasiness, the seller's name doesn't appear on the contract. Even when they sent the counteroffer, it was all in the name of the realtor.


This is completely unprofessional and it can't be this way. Tell the seller's agent that he has no ownership interest and he needs to do his job properly and arrange to have his client sign. Pull title to the property and find out how many people are registered on there as owners. They ALL have to sign any purchase agreement to make it binding. The realtor is an agent and can prepare the contract but not sign anything.



[quote user=Sherilynn]

Am I being paranoid because we are going on holidays? Or would this push anyone else's "uneasy" button?


You don't want to ruin your holiday by stressing over a real estate deal. Get it done the way you need it to be. Trust your gut and don't allow little variances to throw your system into disarray. Lastly if you aren't working with a realtor on your side I suggest you consider it. A good one would muscle past a lot of these little issues.
 
I agree, Brett, and we had tried negotiating some leeway into the contract with the seller's choice of either a longer closing or changing the terms to require him to accept a late closing within agreed upon limits.



That is when the seller's realtor got their lawyer involved. The realtor passed along the advice to me to try to convince me that none of these extra measures were necessary, which only added to my concern. And no, I would never take advice from opposing counsel.



My realtor forwarded this entire email conversation with the seller's realtor. He had done a great job of explaining our position and pushing for what we wanted to make the deal work. The other realtor's responses would seem to indicate that he was talking to a brick wall.



I have decided to pull the offer for now, and I have asked that they please consider a new offer from us upon my return if the home is still available. And if it is, we won't have the same time constraints and maybe the seller won't be such a bully.



Thanks to everyone for their input.
 
as someone above succinctly said, there is always another bus coming.



there were too many bells in your story for my liking and we have instinct for a reason; we've been taught to rather rely on cloudy statistics than gut instinct.



i think you did the right thing, especially with the shady real estate agent with his name on offer, that is sufficient for a real estate council complaint in my neck of the woods.
 
[quote user=Sherilynn]Am I being paranoid because we are going on holidays? Or would this push anyone else's "uneasy" button?
yes and yes



Why can't this close with you being back ? Or is this such a wonderful, once-in-a-lifetime deal ?



Why not do your homework, and then write an unconditional offer, with a lower price, on your terms ?



I assume you are aware that any asset comes with a liability, namely an obligation for upkeep, taxes, insurance, mortgage interest or management fee, plus mental involvement, guilt when not using it .. etc. ?
 
[quote user=ThomasBeyer]

Why not do your homework, and then write an unconditional offer, with a lower price, on your terms ?







The seller seems to think that it's a seller's market. He wants all of his terms and his price too. We may or may not give it another shot when we get back. By then maybe our clients will have found a house they like better anyway.



I agree that there is always another "perfect" house around the corner.



BTW, I have no intention of writing an unconditional offer, especially to this seller.
 
Bet I can name the seller's realtor, as it very similar to a deal we had on the table for a client last week.



Because the other realtor was so unresponsive, the client walked away.



The realtor is not violating any rules. Just burning bridges and being a realtor who I don't want to do business with.
 
[quote user=brentdavies]Bet I can name the seller's realtor, as it very similar to a deal we had on the table for a client last week.



Because the other realtor was so unresponsive, the client walked away.



The realtor is not violating any rules. Just burning bridges and being a realtor who I don't want to do business with.




Another consideration from the client's perspective is: if they are this difficult to deal with when things are going well, then what will happen if things don't go so well later in the process?
 
Hi Sherilynn,



Sounds like you made the right decision. just wanted to add the decision should also be based on how good the deal is.



Example:

You believe you can make 20K more on this deal compared to the next one.

You estimate there is a high chance of 33% to lose your 10K deposit.



looking at it as a probability tree many investors would actually take the risk and proceed with the purchase (in the example, not your deal). 33.3% to lose 10K with 66.6% to make 20K.



Sincerely,

Nir
 
[quote user=Nir]Hi Sherilynn,





Example:

You believe you can make 20K more on this deal compared to the next one.

You estimate there is a high chance of 33% to lose your 10K deposit.



looking at it as a probability tree many investors would actually take the risk and proceed with the purchase (in the example, not your deal). 33.3% to lose 10K with 66.6% to make 20K.



Sincerely,

Nir




Interesting, but how would you estimate the 33% chance of losing the 10K deposit?
 
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