That Troublesome Contract! ….part two
For part one of this “mini-series” please see: http://reopro.ning.com/profiles/blogs/that-troublesome-contract
As you see from Part One, this all started the week after Christmas, yes...Christmas of 2009. But let me get you up to speed with the latest.
Finally, after weeks of back and forth between the buyer's agent and the bank's asset manager, we come to an agreement on terms. Which were pretty good on paper, key phrase here is “on paper”. The deal was $4000 over list price (no competing offers) so the buyer could get more closing cost paid. The bank normally would not pay more the 3%, but the buyer needed up to 6% to make the deal work according to her lender. Red flag #4 or 5, not sure as I had stopped keeping track by now as we were in the second month of this transaction and still do not have a binding agreement. Almost all the delays were cause by the buyer's agent, having him re-write the offer 7, yes 7 times, before he got it right!
I get the A/M to finally understand what was going on and their net did not change, this only took 3 or 4 emails. The A/M send me the contract back to have the buyers initial off all the changes to the contract before he signs it. WTH? Why didn't he go ahead and sign it? But anyway, I roll with it and send it to the buyer's agent with instructions on what to do. This bank's division does not use addendums, they just mark out what they don't like on the original contract and initial all the changes. I've gotten use to it but some agents get very confused about this. I tell the agent the buyer must initial each and every change or it will be sent back to him. Well, it took 3 attempts to all the initials in the proper places, still not sure if it was the agents fault or the buyer's but I'll blame the agent anyway, he should have known better!
So after 2 more weeks I send the contract back to the A/M for his final signature. Shouldn't take more then a day, two if he's busy...right? Wrong again! Three WEEKS later I get the signed contract back and guess what, now we have got to re-negotiate the closing date as by now we only have 8 days to close a FHA loan. Finally, a closing date is set for April 20.....cool! Or so I thought.
Well, by now the buyer has swapped lenders, another red flag! I called the lender to confirm the approval letter like normal, “no problems” says the lender “we can close by the 20th”. COOL! Or so I thought again. This was early mid-March so I thought they had plenty of time to get this done. Wrong again!
Two weeks before any closing I usually start calling the buyer's lender to see how things were going and if there were any snafu's popping up. Well, when I call the lender his office phone number has been disconnected (red flag # 30 something by now?) but he answers his cell phone. Kids and a TV in the background, he quickly tells me he is swamped and would call me back in 10 minutes. Three days later I call him back, same story...will call you back in 10 minutes. I then call the agent, he says he will talk to the lender and call me back in 10 minutes. LOL, this is starting to become a funny game. Two days later he calls me back and says “no problems, we will close on the 20th”. It was around the 15th, (the closing was the 20th) so I say COOL! (I have got to stop saying this)
On the 20th the agent calls me early in the morning to say there is a problem. No kidding? There has been a problem since the very start! I told him he gets one shot at extending the closing date, talk to the lender and see exactly what the problem was and how long he needs to get this done and closed. That afternoon he calls me to say that the lender told him that the buyer's credit score was 613, that they were working on some credit repairs and would need an additional 21 days. WTH? This “lender” issued a letter of approval knowing that the buyer is not qualified? And I believe the agent knew this all along!
After I calm down and come off the ceiling, I tell this agent that this was unacceptable and that he needed to find a way to get this closed by the end of the week, 7 days max. To send me a closing extension request form before 4pm. Well I get it at 10pm that night.....requesting the 21 days I told him earlier he would not get. Needless to say that the bank rejected the request and I prepared the Termination of Contract and Release of Earnest Money form, sent it to the A/M on April 21 for him to sign, the day after the scheduled closing. COOL, I think to myself, I can get this back on the market in time for the last week or so of the tax rebates. Which did prompt a lot of activity locally.
Well, not so fast there big boy! Even so the A/M said that the bank wanted the earnest money ASAP because the buyer failed to close, and I sent the form to the A/M last month for him to sign and send back, I'm still waiting. The contract is still active and I cannot put it back on the market because in Georgia, contracts do not automaticly expire if not closed. It MUST be terminated in writing, no if's, and's or but's. This was explained to the A/M when I sent him the form.
I inquired again this past week with the A/M, as now I'm getting nasty letters from our business office wanting the paperwork or threatening to fine me. Again the A/M says that the contract has expired because it did not close, to send him the E/M ASAP. Now I can understand that keeping up with contract laws in multiple states can be overwhelming and hard to do, no problems. He tells me that other agents in my state do not require this form, why am I?
Because it's Georgia contract law and these other agents are wrong, not to mention breaking the law. I was only trying to protect them from any future legal liability. He did not believe me and requested documentation on this, so I found an article written by the very attorney who writes the contract forms for the Ga. Assoc. of Realtors (GAR) that states exactly what I have been telling him. Still not good enough and they call one of the partners in the mega law firm that handles all of their closing services.
That was Thursday, I'm still waiting for a one page form needing one signature and fax/emailed back to me and I'll take care of the rest.
I'm starting to think this house is jinxed! This is the third contract that has failed to close, I've had to fire a team member over it (that's for a whole other blog there), and now I expect to be fired by the bank because I refused to break contract law. Not to mention that I'm about to get a $50 fine for not turning in paperwork that the A/M has refused to sign.
I'm hoping that Part Three is a much shorter story to write!
Steve Adkins – REALTOR®
Better Homes and Gardens Real Estate Metro Brokers