Mislead into selling our home

[Kara Daugherty]

We recently put an offer in on a short sale property.  We never intended to list our current home until we were under contract on another home.  Our realtor emailed us that "the bank agreed to everything" and asked when we would like to list our home.  Us not being real estate experts took his word and assumed the signed contract we received was bank approved not just seller approved.  We listed our home and accepted an offer.  Hours later our realtor informs us the bank wants 125K more on the short sale property and proceeded to tell us it was always subject to bank approval.  First of all it had been two months so why wasn't he following up?  Second but most importantly can he be held liable for misleading us in the first place.  We would have never listed our home had we known it was not bank approved.  What code of ethics has he violated?

[Charlie MacPherson]

@Kara Daugherty  If everything is as you say, the agent and his brokerage may well be on the hook for all sorts of damages.

For what it's worth, I think it's irresponsible to have a client offer on a short sale if the closing date is at all important.  The dates get moved over and over. The last one we did took 9 months and I've heard of others taking 3 years.

Also, even after the bank (1st lien holder) approves the amount, subordinate lien holders (2nd, 3rd, etc) can still come back looking for more money.

It appears that he failed in his fiduciary obligations to you by:

1. Not informing you up front that short sales can take anywhere from months to years.
2. Misleading you that the time was now right to list your home.
3. Apparently putting his desire to get your listing ahead of your need to have a place to live.
4. Stating that "the bank approved everything" when they hadn't.

Fortunately, his statement about bank approval was in an email, so you have documentation. I hope his request to list your home was as well - that just strengthens your case.

At this point, here's what I'd do:

Talk to the agent's boss - the broker of record for the agency.  Tell him that you're prepared to take legal action and to go to the Real Estate Commission to file a complaint.

Ask the broker how he intends to make this right.  Give him a chance to fix it, though I don't know what solution would be.

If he doesn't have a satisfactory answer, follow through with an attorney.  To the extent possible, make sure that all communications are in writing.

Sounds like a real mess.  Good luck.