Seller Wants to Back Out After Contracts Are Signed

90 Replies

Submitted a full price offer for a 3/1 with a guest house. The numbers work great after house is rehabbed. Offer was signed yesterday by seller & I paid both earnest money and option fee. 

This morning, the agent calls to say the seller was confused and really didn’t want to sell it at that price. That was the price he wants to net. Seller says he wants 10% more to go through with sale. The seller is refusing to go forward with the sale & basically indicated there is nothing that can be done. 

Seller’s agent indicates he simply won’t cooperate with the sale & wont show up to closing. 

Anyone ever have this type of thing happen or have advice on how best to proceed? It is a standard TREC contract. 

Thanks in advance. 

I would offer him a buyout of a few thousand dollars. 

It would teach him and his agent a lesson in contract law... and avoid jumping through all the hoops it will require to get to the closing table.

Sick your lawyer on him and teach him a lesson. Force him to close.

@Thomas S. On principle I agree with you. But here in the States we pay our own lawyers unless there is an express agreement to the contrary -- check the TREC contract on that -- so my answer assumes that a specific performance case would cost OP more than the 10% bump in price. Yeah, he'd end up with the property but the numbers would no longer work.

Interesting point concerning the sellers agent.

Originally posted by @Tom Gimer :

I would offer him a buyout of a few thousand dollars. 

It would teach him and his agent a lesson in contract law... and avoid jumping through all the hoops it will require to get to the closing table.

 and then use that as your ED in about month when it doesn't sell..... and they get desperate.

Tell your lawyer to inform the seller it's a done deal. The seller can resist for as long as he chooses but he can not sell it. Eventually he will have to cave.

I contacted a lawyer. He indicated that the seller would be in violation of the contract. It could take some significant time & litigation, but I would win. 

I offered to let seller out of the contract for a couple thousand dollars. Essentially, the get out cost matches what he would have kept from me had I backed out of deal. 

That seems fair & congruent. I’m still disappointed to not get house at the number we originally agreed upon. 

@Brad Gibson Is this over? Keep us posted. The thought of paying you thousands because he couldn't do simple math may not sit well with your seller.

@Tom Gimer   Ya the buyer can't get his EM back unless the seller signs.. as you know.  so when that pearl comes up.. both probably walk away unhappy.

@Thomas S.   the seller can sell to anyone he wants.. only way the buyer could make that tough is if he files a lis pendance and that cost a ton of dough.. as the OP has already figured out.. unless his attorney works for free he has already spent money to be told this is a dead deal.

sometimes you just move on .

in 40 plus years of transacting real estate I have done ONE specific performance case and we won it.

but completely different scenario I HAD to ... I had paid the sellers back tax's to the tune of 45k and given her another 20 k of non refundable EM.. so I had 65k large invested in the deal and she refused to go in and sign..

10 k in attorneys fees and 2 years later I won.. then I had to evict her because she would not move that took another 6 months..   this run to attorney and think they can wave a magic wand and make stuff happen is just flawed thinking..

this case is worth NOTHING.. the buyer should just move on and chalk it up.. what are his damages really.. that's what it boils down to.. he gets his deposit back he gets his EM.. he is out a little time.

In my case even with a court order the lady would not sign.. Title company transferred title to me using a court order.. I had never seen title transferred without a deed before .. so that was new.

@Tom Gimer   @Thomas S.   PS Thomas to win a claim like this you need to PUT up the entire purchase price in cash into escrow on the day of closing.. and then let it sit there for the 1 to 3 years its going to take to force the specific performance.. you can't just put up EM and then sue.. when the closing date comes you have to put your money into escrow interest free..

most people need loans to buy real estate.. in my case it was a cash deal.. so we put up another 100 and some k in cash and let it sit there.. so really how many looking to buy a simple rental house are going tro put up 100k plus in cash and let it sit there to try to win a deal that is only 10% higher than they wanted to pay.. you see logic wins out here.. the logic of hey sue the @@@@@ is just rookies talking.

@Tom Gimer   trying to negotiate money out of the seller is a complete waste of time.. the seller will just sell it to someone else and leave the buyers EM in escrow.. and when the buyer wants the seller to sign to release how quick to you think the seller will do that..   I have seen sellers never sign.. and the money has to then be sent to the court for an interpleader and the buyer would have to hire an attorney which will probably cost more than the EM to get it back..

@Jay Hinrichs While what you're saying is true, if OP wants to win this (i.e., get his EMD back plus some spending cash) he needs to behave like he's willing to see it all through to fruition. I would also be squeezing the listing broker as it's his/her fault they didn't create a net sheet.

@Brad Gibson I am guessing this guy won't agree to pay you anything. Your leverage is the fact that he has a signed purchase contract with you, so he cannot sign a new contract with someone else until this is resolved. The sellers agent doesn't seem to be helping, despite his ethical obligation. You can't make someone sign paperwork, but the agent needs to let the seller know that the property cannot be relisted on the MLS until this contract is cancelled. If the seller is saying they didn't understand how much money they would get, that is a failure of the agent to properly explain listing and closing fees. If they attempt to relist the property, while under contract with you, I would report the listing agent. They could lose their license over this.

Others are right with regard to forcing the closing. Even if you hire an attorney and spend a bunch of money, there is no guarantee you will win. The sellers agent knows that. Still you need to make this a little painful on them, so the seller and agent learn a lesson.

@Tom Gimer   case is just not worth it.. he is giving it a shot to get a few grand for his troubles.. I suspect the seller just goes dark..  agents cant control sellers all the time and sellers change their minds it just happens.. again in my mind this is just a sale fail move on.. although it makes for some nice back and forth of BP.. and it brings out the SUE the &&&&& camp which always cracks me up.. as most have never actually litigated anything.

@Jay Hinrichs Like I said, I agree with you. But breaches should have consequences. In this case whether that will be a few bucks, a complaint with the REC, a negative review... who knows.

It will be interesting to hear how it plays out.

This one is completed.  The sale is going to go through.

This morning I followed up with seller's agent and was able to get additional context.  The house is a flip and the guy is simply having seller's remorse thinking he could have got more money than the list price & what we agreed upon in the contract.

 I told both of them that I would see this through to the end & wouldn't mind sinking a few more thousand on attorney's fees just to hold everything up and costing both of them some time and money.  The home also cannot be listed again until this is resolved and I don't mind him holding onto the flip until we can come to an agreement.

I also posed a second choice to the first option.  Originally, I asked him to return my EM plus an equal amount.  This morning, I indicated I wanted the deal to go through and would be willing to come up with half of the additional amount the seller wanted.  Either option would work for me.

The numbers still work at the new sale price, but it'll reduce my COC as well as my monthly cash flow a bit. But it gets the deal done none of us have the additional headaches. It sucks to get screwed out of an additional 10k, but it is what it is.

Seller agreed to proceed with the sale and will meet in the middle.

Originally posted by @Brad Gibson :

This one is completed.  The sale is going to go through.

This morning I followed up with seller's agent and was able to get additional context.  The house is a flip and the guy is simply having seller's remorse thinking he could have got more money than the list price & what we agreed upon in the contract.

 I told both of them that I would see this through to the end & wouldn't mind sinking a few more thousand on attorney's fees just to hold everything up and costing both of them some time and money.  The home also cannot be listed again until this is resolved and I don't mind him holding onto the flip until we can come to an agreement.

I also posed a second choice to the first option.  Originally, I asked him to return my EM plus an equal amount.  This morning, I indicated I wanted the deal to go through and would be willing to come up with half of the additional amount the seller wanted.  Either option would work for me.

The numbers still work at the new sale price, but it'll reduce my COC as well as my monthly cash flow a bit. But it gets the deal done none of us have the additional headaches. It sucks to get screwed out of an additional 10k, but it is what it is.

Seller agreed to proceed with the sale and will meet in the middle.

You settled in the middle but not really, you are paying $10,000 over your contract price. My guess is they got another offer after he signed yours and the realtor thought up the perfect plan to get out of the deal. Even the realtor gets a few hundred extra dollars in commissions thanks to you.

As long as the numbers work, I understand why you are doing it. I just hate to see behavior like this get rewarded. Please consider reporting the agent after closing. 

Good to hear that it will go trough.......If you wanted to screw with the seller a little you could have gone to the courthouse and filed a memorandom of contract and that should lock his property up from resale until he deals with you......... Muddy the title with the sales contract thats sitting out there waiting for action.  

This post has been removed.

Originally posted by @Joe Splitrock :
Originally posted by @Brad Gibson:

This one is completed.  The sale is going to go through.

This morning I followed up with seller's agent and was able to get additional context.  The house is a flip and the guy is simply having seller's remorse thinking he could have got more money than the list price & what we agreed upon in the contract.

 I told both of them that I would see this through to the end & wouldn't mind sinking a few more thousand on attorney's fees just to hold everything up and costing both of them some time and money.  The home also cannot be listed again until this is resolved and I don't mind him holding onto the flip until we can come to an agreement.

I also posed a second choice to the first option.  Originally, I asked him to return my EM plus an equal amount.  This morning, I indicated I wanted the deal to go through and would be willing to come up with half of the additional amount the seller wanted.  Either option would work for me.

The numbers still work at the new sale price, but it'll reduce my COC as well as my monthly cash flow a bit. But it gets the deal done none of us have the additional headaches. It sucks to get screwed out of an additional 10k, but it is what it is.

Seller agreed to proceed with the sale and will meet in the middle.

You settled in the middle but not really, you are paying $10,000 over your contract price. My guess is they got another offer after he signed yours and the realtor thought up the perfect plan to get out of the deal. Even the realtor gets a few hundred extra dollars in commissions thanks to you.

As long as the numbers work, I understand why you are doing it. I just hate to see behavior like this get rewarded. Please consider reporting the agent after closing. 

You are certainly correct.  I was nicked for an extra $10,000.  

Unfortunately, I have found in the 1.5 years that I've been doing this that the real estate business is super slimy.  This will be my sixth deal.  During that time, I've lost 3 due to shady circumstances and agents or sellers who put dollars over ethics.  It seems like it is simply the cost of being in this business in real estate.

Listing Agent should be donating his commission to make up for his dumb mistake.

I take personal pleasure in bringing actions against sellers like this when clients are put in a tough spot. Also, perhaps I need to change markets, because you would've spent less than $10,000 in fees here to force the sale, and we have case scheduling standards that would've brought the issue to trial in a matter of months. Additionally, many states have statutes which provide for attorney fee shifting (losing party pays winner's fees) in the event of bad faith, and this clearly falls within the realm of a bad faith specific performance action.

Sucks to hear you took the hit but glad it will still work for you!

@Brad Gibson   first at all, thanks so much for sharing, this situation happened to me 6 months ago and I filed an affidavit of interest,    now they are under contract and the title is not clean because this affidavit,   they are calling me trying to negotiate it,  for sure I will make some money in  a lost deal 

OMG, I close in about a week and reading  this sends shivers down my spine. Fingers crossed I don't have to deal with this type challenge.  Glad you got it resolved in the end, even at a higher cost. Its  sad that people do this, yet in some small way I can understand as a while back I thought of throwing in the towel and giving up this whole real estate investing journey.  This was right after my first eviction as a newbie landlord and tone of stupid unplanned spending on unit remodeling that was certainly not an investor remodel.  I could not imagine myself ever being able to drive on the street that the property was ever again.  The thought of someone else owning my "baby" was so painful and luckily for me, I had not put it on the market, not even started drafting any paperwork, I had just talked briefly to my agent at the time about doing this.  My agent was ready to go, but I spoke with family and friends and they could sense my indecision and pain (something I wonder why agent didn't sense but probably said agent was driven by the idea of commission and just assumed, oh well, lets do it!  This is where I really wish that some agents could take the time to properly consult and guide their clients on the path forward.  In the end, yes the client makes the call, but some of us are still newbies at this that, what may be a decision to sell one day may be a no the next because it is driven my so much emotion.  Help give seller some kind of "counseling" to truly know if they want to and are ready to part with the home, to avoid the seller's remorse and wasting of everyone's time and money.  It is rather shady, the way this went down, but Karma is oh so ever present.  I do believe @Brad Gibson that the universe has a way of righting the wrongs and you will look back one day and thank yourself for losing the unplanned $10K for you will have a property that will still cashflow by your indication, and who knows what kind of appreciation it will garner over the years.  Now as for the seller and that real estate agent of his.......... well lets just say, what they did was not nice.  Good luck and thanks for sharing this post.  It must have been a draining couple of days for you, but often we are forced to make unplanned sacrifices for the things we want really bad.  All the best.

PS.  Do not be surprised to see said seller peeking over the fence looking in at his property as some with sellers remorse do, LOL.  One of my properties, the seller kept doing drive-bys and talking to the tenants and I just one day candidly asked if there was something I could help them with, never heard from them or saw them again, LOL!   I truly wanted to also share with them the progress I had made to the home and to show them that I was giving their once home the same love as they did, but I think they got uncomfortable when I started to try to invite open dialogue and/or were too pained to be around the home, so I never again heard from them.  :).  Moving forward.........

Updated 8 months ago

ton

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