Advance notice, this is my first time selling my house, so I'm just looking for advice here. I listed my house for $220k, there was a bidding war and it came between two buyers, one for $225k and one for $232k. The $232k offer is from someone who has been waiting for my property to come on the market for a few months, so I suppose my agent and theirs have a good working relationship. It is a very hot market and very competitive right now. I accepted the $232k offer, which come to find out was an FHA loan. Appraisal came in at $220k, and I was basically told that either I accept the lower price or we can't go forward, so I agreed we would reduce to $220k. I was not given the FHA amendatory clause to sign until two days ago. Now that I'm researching this, I see that the buyer could have made up the difference out of pocket (which I know they can, because they are paying the 20% down payment in cash), and that I could have pushed for them to meet the asking price. This is the second time I think my agent has not been forthcoming with me (after the inspection, he originally indicated I would have to make concessions in sale price if I did not want to make repairs on the home-I researched and found that I could refuse repairs and make no concessions). He has been giving me a laundry list of why I should just go forward (mentioning the repairs needed again, which I feel I made clear I was giving no concessions). My gut is telling me that my agent is trying to get good deals for the buyer/agent, and at this point I don't even want to move forward with this agent. He's saying we are past the point of cancelling this transaction. If I don't sign the FHA amendatory clause, does this breach my contract? I do not feel I was fully informed about my options.
You have to read your contract carefully to know if you can or not.
My recommendation would be to contact your attorney today and have him/her go over the purchase contract. It may cost you $250 or whatever he/she charges but that sounds like it would be less than you're losing on the contract.
Also have the attorney go over your listing agreement. The listing agreement will govern if you can cancel your listing with this agent or not. Most attorney's can find a way to get you out of it if needed, even if it's only by a simple letter on his/her stationary. Broker's hate the thought of attorney's getting involved (I should know, I've been in this business for over 20 years and am married to an attorney).
If you feel you can't trust your agent, get rid of this person ASAP. Your agent has a fiduciary duty to YOU, and you alone unless he/she is also representing the buyer. In that case, they still need to treat each party honestly and fairly. It is possible that the agent doesn't know what they're doing, but if they're giving you bad information and aren't watching out for your fiduciary interests then you should get another agent. From what you said in your post, this looks like an agent only looking out for their own wallet, not yours.
Why would a buyer use FHA if they are paying %20 down?
My thoughts exactly, something isn't jiving with all of this. I do have a request for a consultation out to legal counsel, but haven't heard back yet.
Not signing the fha amedatory clause doesn’t help you, or hurt you, at this point...it should have been include with the purchase agreement. It only says you can’t keep their EM if the house doesn’t appraise...nothing else.
Did you Officially agree to the $220k, in a written amendment/addendum? If so, you are committed, under contract.
In both the price reduction and inspection repair issues, you Always have three choices....
Negotiate something in the middle
There is always an issue when accepting an offer that may be more the appraisal.....it’s a common game to watch out for. If the $225 offer was financed, you’d have the same issue.
Do be aware though...if you refuse the price reduction on the FHA offer, that $220k appraisal sticks with the property for 6 months for All other fha buyers.
Thanks for the additional insight Mr. Brooks. I did sign an addendum already agreeing to the $220k, so I'm afraid it sounds like there's no turning back. Lesson learned I suppose. I will post if the lawyer advises differently, but I think you sound spot on.
Speak to the agent's broker and explain the position your agent put you in. Ask the broker for a break in their fee. Hey, it doesn't hurt to ask.
As a broker for 30+ years, I can tell you an experienced broker or agent doesn't make this type of mistake very often; when we do, we own it.
My agent wound up bringing his commission rate down, which made up for about 1/3 of the difference that we missed out on between original offer and the revised offer after appraisal. I think he understands that I would have expected him to push for some of the 20% cash down that they had to go towards the price they agreed upon. He seems a bit on the passive side, and I think maybe it's just not in has nature to be more aggressive with these type of things. Now I know for any future sales I guess!
@Carissa Purcell Your realtor wants to sell your house. If he sells it for $10K more, making up a number, his commission only increases slightly. You are the one with the most to gain, or lose, with the sale.