I have been in contract with my first deal (buy and hold) since 5/20/14 with a closing date by 7/12/14. The seller, who is a broker (but not the selling agency), signed the property disclosure with no issues brought forward so I signed and went forward my inspection. At this point it has still been sight unseen until I accompanied the inspector. During the inspection there was 1 of 4 furnaces red tagged by the gas company, a perfuse smell of gas in a separate crawl space, leaking roof & crawl space, termite damage, structural & foundation issues. We renegotiated for a lower price or the seller would pay the cost of inspection. Three days till close my bank cancelled the loan process, however; my agent & the seller's agent found a loan office the next day that would carry the loan but needed 20-30 days for underwriting.
My agent contacted the seller to discuss the situation and he was both unprofessional and uncooperative. He pulled his contract from the listing agent leaving both agents and myself hanging out to dry.
The seller had to have basic knowledge of these issues. My agent suggested we file a complaint with the state. Both agents are put down as witnesses with specific points & pictures from the inspection included.
So time for the real question: If the state sides with us, is it worth going to court
Are you going to sue for performance of contract? I guess I'm trying to see what your goal is. Do you have a monetary loss, and what is your loss? It may be best to walk away... and file a complaint with the state's real estate commission (or whatever your state calls it).
My agent advised me to go to the state to file a complaint and then go from there. As far as monetary loss I am out my inspection cost, time off work, and time invested into acquiring the property. I would not have went forward if he disclosed the furnace and structural issues.
Last night my agent called up saying the seller had a "change of heart" and would sell the property. At this point I just want my $750 from the inspection and would like my lost wages. I'm half tempted to ask the seller to purchase my inspection report. This way he can fix the place and list it for higher.
You don't have a leg to stand on because your lender let you down, and now you want the seller to wait another 20 to 30 days hoping you will be closed on the deal. What did you offer the seller to wait another 20 to 30 days? If I was the seller, I would sue you for wasting my time. A judge will laugh at you that you want lost wages. Did you have money in escrow?
The disclosure/inspection is a non issue. You proceeded with the contract after the inspection, and a price reduction. You failed to obtain financing and close within the contract time.....your failure, not the sellers....end of story. As a side note note, the disclosure, at least here, has no real effect until After you have purchased a property, addressing issues which are Not obvious, and can reasonably be shown to have been known, or covered up, by the seller. The disclosure has No effect or implications regarding you making an offer and spending time and money on inspection.
I had financing approved, we were just waiting for the close date. The price reduction after the inspection never happened, I tried to negotiate but the seller kept dragging his feet and when the bank found out about the disclosure issues they dropped out. I see where its not worth moving forward.
This was my first deal, so please let me know where I made my mistake for future reference.
- 1) Started with verbal negotiations.
- 2) Arrived at an agreed price.
3) Signed contract.
4) Signed disclosure.
5) Had the property inspected.
the major mistake was executing a contract without ever seeing the property. Also, not canceling the contract during your inspection period, if you couldn't negotiate a satisfactory reduction. The bank didn't cancel your loan approval due to "disclosure issues" from the seller. They may have denied the loan due to the actual property conditions, or appraisal, but not because of a seller's inaccurate disclosures as they don't base their approval upon that. These types of situations can be expected when making offers sight unseen.
Thank you @Wayne Brooks !
Join the Largest Real Estate Investing Community
Basic membership is free, forever.