I am a first time homebuyer in California who has been looking for a home for a year and a half. Never been in escrow before as I was always priced out. But finally got my offer accepted but ran into this issue. Seller had done the pest inspection through a company which quoted him $8500 for pest work. Report was on MLS. We read this inspection report and knew that if we buy the home we won't be going with this pest company as their quote was very expensive.We bid on the home and our offer was highest. Seller countered saying that the house will be sold "As is" and he verbally told us that he will not do pest work. We said ok and we signed the contract. Now I am in the 17 day contingency period. We did home inspection and found lots of small issues....nothing really big. Sellers agent emails us saying that the company that gave pest quote was scheduled to do the work next week and asked us if we want to go ahead with the pest work through that company. We told him no and that we want our own pest inspector to give us a new quote as we are paying for it anyways. Two days later the sellers agent replies that the pest work is already done. The company went ahead and did the work without his knowledge. The seller knew about it but the agent didn't. Now the agent says we have to pay fully to the pest company as we said in the contract that seller won't pay for the pest. But the contract says the home is being sold as is plus we have email proof that we were trying to get better quotes while the original company was doing the work without our knowledge. The seller already has a higher offer on the house which he received after he accepted our offer. So I am sure he will try to back out if we don't pay the pest guy. Can he back out of this sale ? What if he is unwilling to close the escrow until I pay the pest company ? What are my options ? If you know a lawyer who can advise me on this issue please let me know.

That's good advice from J Scott, and I'll add another suggestion. If you can get an idea of what YOUR pest company would have charged, you might offer to increase your offer price by that amount. You were going to pay for the pest work anyways, and by having the work done there is added value in the deal (and better yet you can now add the cost into your financing if it appraises high enough). That, coupled with the possibility of a lawsuit or buyers agent commission obligation if they violate the contract and back out, might convince them to cut their losses and eat the balance of their mistake.

I'm not a lawyer, but here's what I'd do... First, I don't believe you have any obligation to pay for the pest control, and the seller doesn't have any right to back out of the deal because of it. Second, you may have some recourse if the seller tries to back out, but that will depend on the contract. But there's likely an easier way... Assuming you have an agent, your agent is almost certainly entitled to his commission on this deal; in my state, if a seller backs out, it's very easy for the buyer's agent to get a judgement against the seller for their commission. Which means that if the seller backs out, they'll still be on the hook for the agent's commission; if this house is in CA, it's quite likely that the commission is more than $8500 (the amount of the pest control). I'd have your agent remind the listing agent that their client will be on the hook for the buyer's agent commission, plus also may face other action from you. It's quite possible just the idea of having to pay the extra commission will be enough to get the seller to do the right thing. If that doesn't work, the next step is to go to the listing agent's broker and see if the broker can talk some sense into his agent and the seller. If neither of those work, get a lawyer...

Your agent doesn't decide what options you have. You are the client and can do whatever you want (within the law), regardless of whether the agent agrees/approves or not. It's up to you how you want to proceed (I gave my opinion above), but the key here is that it's up to YOU...not your agent. If your agent has any issues with what you want to do, talk to the agent's broker. Btw, what contingency does your agent want you to sign?

"As is" DOES NOT mean no negotiation. It means the seller won't fix anything. If you found something during your inspection you can certainly go back to the seller and try to renegotiate a repair credit or price reduction. As is means they aren't going to make repairs, that's all.

I was about to say that, but K. Marie beat me to it, as usual... :) I would actually make sure your agent provides this information about the asbestos in writing to both the listing agent and the listing agent's broker, so everyone is on notice that if it turns out the information is not disclosed to the next buyer, someone could lose their license. Do that, and the seller may realize that it's easier to just negotiate with you than to encourage you to continue to try to screw him over for his unethical ways... :)

Before you get legally fortified, I suggest being pragmatic about the pest repairs. Have you seen the completed work and are you satisfied with it? Was the house tented as part of the treatment? That has real value, IMO. If the pest treatments are completed, your move-in won't be slowed down. If you offer to pay half of the $8K, and the seller accepts that, is that the same $4K you were going to spend for treatment and repairs anyway? In previous posts you said you were planning to do the treatment and repairs after you saw the initial report when it was part of the listing. It sounds like the seller and agent are asking to you sign an addendum, not a contingency. He wants to change the terms of the original purchase agreement so that you pay for repairs (that he ordered). If you really want the house and the $4K makes sense to you, I would counter with offering to pay half, and let the seller pay half from his proceeds. The seller IS liable for the entire pest repair bill, but I suggest you not let the principal of the thing get in the way of buying the house you want IF you can come to a satisfactory compromise. (Although I do wonder if his agent is giving him accurate info about trying to back out of this contract. Even so, sellers do what they want to do.) As others have suggested, you can insist on performing on the contract, but you'll be into that project for more than $4K before you know it. $350/hr for attorneys adds up fast. Who is the listing agent? If you want to send me a PM or email and let me know, maybe I can help.

The seller is trying to screw over the buyer by *FORCING* him (with the threat of losing the deal) to pay for a service the buyer clearly wasn't interested in. The property may have needed pest work done, but I can't imagine what $8500 in pest remediation entails. Most likely, the seller is friends with or otherwise working with the pest control company -- and is trying to use the buyer to generate some business. I could be wrong about that, but if the OP's side of the story is accurate, that's what it sounds like to me. So, if the seller is trying to screw over the buyer, I see nothing wrong with the buyer doing the same thing FOR THE SOLE PURPOSE of trying to keep the deal alive. If the buyer needs to do spiteful things to force the seller to follow through on the deal, he should do it. Just my $.02... I don't like people who try to take advantage of other people.

I assume the pest control work had to be done prior to, or soon after closing, for your financing, so you were going to pay cash out of pocket. Offer the amount of whatever legitimate quote you get, as additional cash at the closing. That with the real possibilty of you suing for breach/specific performance, and commissions being due should make him come around. Are you sure your contract doesn't specifically address the pest work, or in some fashion(ie. lender required repairs, etc)?

Can seller backout of contract PLEASE HELP

Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

13y

Originally posted by Gaurav S.:

Hi Everyone,

We decided to not fight this battle and did not remove the contingency. Since this was a estate sale I did not have the cheaper mediation/arbitration tools available to me and suing the seller would have cost as much money as the pest remediation problem.

Also after we notified the selling agent that we were backing out he forwarded an email to me where my realtor had asked the seller to do the Section 1 of the pest work before the appraisal. So if I would have gone to the court this email would have definitely worked against me.

My realtor never told me that she had asked the seller to do the pest work before appraisal. She kept insisting that the seller went ahead and did this work on his own and we shouldn't pay for it. But from day one it was the seller who was going to initiate the work and we had verbal agreement that we would pay for it.

Now I am wondering if I should fire my realtor :(

Has the seller countered or responded to your cancellation yet? I won't post the details here, but the sellers/heirs may need to sell that property to a buyer that can close asap more than they need to move on the the next offer. And we don't really know anything about the other offers. The equity situation on that house is tight and the heirs will be lucky at this point if they don't have to bring cash to closing. They may want to keep the deal with you alive. Get clear about whether you and your wife really want the house or not. The seller may be coming back .....

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Gaurav S.

OP

Homeowner · los angeles, CA · Member since 2011 · 57 posts · 1 vote

13y

K. Marie Poe No they haven't countered yet. The cancellation deadline was today at 4:00 p.m.

The house has no debts and its free and clear. Why do you think the sellers might need to close the deal ASAP ?

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J ScottPro Member

Moderator

Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes

13y

Originally posted by Gaurav S.:

Now I am wondering if I should fire my realtor :(

Wait, your agent told the seller to move forward with the pest control knowing you didn't want them to, and then told you your only options were to pay for it or back out of the deal?!?!?

Not only would I fire my agent,I'd sue him or her to get my money back that I spent on the deal...

Then I would file an ethics complaint with the RE commission...

But again, I'm spiteful...

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Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

13y

Did you read a title report that shows that the house is free and clear? Both the county records and the probate file show that the house has little equity as the owners had a reverse mortgage on it.

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Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

13y

Originally posted by J Scott:

Originally posted by Gaurav S.:

Now I am wondering if I should fire my realtor :(

Wait, your agent told the seller to move forward with the pest control knowing you didn't want them to, and then told you your only options were to pay for it or back out of the deal?!?!?

Not only would I fire my agent,I'd sue him or her to get my money back that I spent on the deal...

Then I would file an ethics complaint with the RE commission...

But again, I'm spiteful...

I'm spiteful too but try to act like I'm not. Trying to take the high road and all that. However, I'm with you on this one. If there is something in writing where the buyer's agent approved pest work without his permission, I'd ask the agent/brokerage for every dollar spent on the deal and I'd spend money on filing an action action against them if they didn't pay.

1 Reply

Jim Blatchley

Investor · Chesapeake, VA · Member since 2011 · 47 posts · 15 votes

13y

J Scott, No that's not being spiteful, that's keeping them honest. It's Realtors like this that give Realtors a bad name.

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Joe Delia

Involved In Real Estate · Rochester Hills, MI · Member since 2010 · 812 posts · 178 votes

13y

Lets keep in mind this is one side to the story.

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Dave Toelkes

Investor · Pawleys Island, SC · Member since 2008 · 1k+ posts · 837 votes

13y

I would consult an attorney before making a decision on your next action. In my opinion, further negotiating the contract to resolve the pest treatment issue (even if you and the seller agree to split the bill) reopens the contract -- you are essentially voiding your accepted offer and making a new offer.

The seller can refuse your offer without countering. At this point, you don't have a contract. The seller is free to accept his backup offer at the higher price.

Just how I see it. I am not an attorney.

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Shaun Reilly

Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes

13y

It might be to late at this point, but I would ask my agent and their broker to absorb the cost of the pest work.
If your agent told them to do it when you told them not to then (S)HE should be on the hook.
All nice for you to get them to pay you back for the inspections and apprasials but you want the house!
Looks like the pest stuff is still only like half their cut of a commission anyway so they are better off than paying much less with no income.

Espcailly since there is NO WAY I would not find a new agent after messing up that big AND not fessing up to it.

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Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

13y

Gaurav S. The sales info for this house just crossed my desk this morning. It sold three weeks ago for the same price you were in contract for. We don't know the all the terms of the sale, but I think it's unlikely that the seller/estate was able to get the new buyers to pay for the termite. So it looks like they got the house with termite for your contract price.

The house had very little equity as it was encumbered with a fat HUD insured reverse mortgage that was called due. After closing, agent and probate court fees, the heirs (of which there were nine listed) probably received very little proceeds.

I mention this because it can sometimes be helpful to know the back story when dealing with sellers in difficult situations, as was the case with the termite negotiations on this one. The estate really needed to close asap and may have been open to settling with you.

Hopefully you've found a better house by now. If not, feel free to call on me if you need to problem solve on another one in our area.

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Gaurav S.

OP

Homeowner · los angeles, CA · Member since 2011 · 57 posts · 1 vote

13y

Hi

Thanks for checking back on this. My realtor told me that the home did got sold for 10k more than my offer after seller paid for the termite repair. It seems that wasn't the case.

I haven't found a home yet and based on how the listing prices have gone up probably won't find an affordable home like that anytime soon. Also rates have increased since then.

I know you don't purchase in Santa Barbara area but was just was wondering what your crystal ball says about the future of home prices ?

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Account Closed

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

13y

It's hard to say what really happened. Transfer tax indicates a sale of $560K. If the seller paid the $8K termite, I'm not sure how they came out ahead of your offer.

No crystal ball. I'm working North SB county now and prices are up there as well.

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Can seller backout of contract PLEASE HELP

Can seller backout of contract PLEASE HELP

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