I don't often share my client's experiences with others, but this is one that I think many sellers and buyers could learn from. I sure learned a lot from these clients before they were even MY client. Let me take you to the beginning of their story...... I will refer to seller as "Mr. and Mrs. Smith" and the buyer as "Mr. Jones" just for story sake.
It all started about a year and half ago. The Smiths decided it was time to put their home on the market and downsize to a smaller home with no yard. So, they listed with a very experienced agent and local, well-known company. It was only a few short weeks later they received a CASH offer to purchase from Mr. Jones. The Smiths and Mr. Jones agree to terms of purchase which consisted of:
1. CASH offer $142,900
2. Buyer to put up $20,000 earnest money upon execution of the contract, to be held in Broker's escrow.
3. Close within 30 days.
4. Buyer to have home inspection and termite inspection done prior to close.
5. Both parties agree to Dual Agency---listing agent and selling agent are with same Real Estate Office.
6. Buyer to submit Proof of Funds upon execution of contract.
Seems like a pretty awesome contract- RIGHT? Well, at least the Smiths' thought so. A few weeks go by and the Smiths' ask their agent if they could get a copy of their listing agreement, the executed purchase contract, copy of the $20,000 earnest money deposit into the Broker's escrow account and proof of funds from Mr. Jones' bank. The Smiths were told they would be given a copy of all documents they had signed for the listing and the purchase agreement. So, the Smiths patiently wait and about a week goes by. They call up their listing agent and ask again for the same documents, and again they were told they would receive copies of everything they had signed. Keep in mind during the entire transaction, there was no communication between The Smiths and their agent unless initiated by The Smiths.
So, let's speed up to about 2 weks prior to closing. The Smiths contacted their agent to get the status on the closing and to make sure everything was still on schedule to close. According to The Smiths, they were told by their agent that everything was on schedule to close on expected date and it would be safe for Mr. and Mrs. Smith to go ahead and start packing and begin moving their belongings into their new home (they have already put down a large deposit on a new home). Let's fast forward to just a few days before closing....... The Smiths still have no copies of signed listing agreement, no copies of executed contract, no verification of $20,000 earnest money deposit in escrow, no proof of funds, nor do they know which attorney will be handling the closing. DO YOU SEE ANY RED FLAGS....YET??? But, both the listing agent and the buyer's agent say everything is a "go" and it would be good for Mr. and Mrs. Smith to go ahead and move out so Mr. Jones can do a walk through. So, The Smiths finish moving out their last bit of items. During the process they also manage to sell many of their belongings, furniture and all of their yard equipment. So, the day of closing has arrived!! The Smiths are excited to finally be closing on their home and are ready to move forward in the new chapter in their life. But, it all comes to a CRASHING hault! The Smiths get the dreaded phone call from their agent that the house isn't closing. There are issues on the buyer's end and, in fact, the buyer is backing out of the contract. Well, you can only imagine the heartbreak Mr. and Mrs. Smith could be feeling at this point. Right? Well, they are extremely heartbroken but also realize that the buyer, Mr. Jones, put up $20,000 earnest money and The Smiths know that escrow will be released to them due to the buyer defaulting. Or, so they thought! After many questions regarding the earnest money, The Smiths soon realize the $20,000 earnest money deposit was never collected or deposited into the Broker's escrow.
The Smiths are over-whelmed with many emotions.....upset, angry, devastated, unbelief and the normal "HOW", "WHY" and "WHAT WENT WRONG"? Needless to say, they didn't get any answers from either agent. All of the "RED FLAGS" were there from the very beginning when they signed the listing agreement. So out of sheer frustration, they vent to a close family member, who I just happen to be friends with. He calls me up and ask if I would be willing to meet with them and talk about their options. So, I did..... and an hour later I had a new listing with Mr. and Mrs. Smith. We had showings right away and in about two weeks had our first offer. There was disappointment again when this buyer was unable to follow through with their commitment due to unforseen circumstances. So, the house went back on the market and in about 5 days we had a second offer. This time we closed in a decent time frame and both the buyer and, of course, the sellers are thrilled.
The lesson learned here is to watch for those red flags from all parties involved. If questions are not being answered, copies of documents are not being delivered, inability to verify deposits, and breech of contract from the other party and anything else that feels suspicious..... there probably is a problem. Ask questions and demand answers. Your agent is supposed to be there for your best interest!