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SHORT SALE BUYER CANCELLED CONTRACT EPIDEMIC - DIAGNOSIS AND CURE

This past week my office had 5 short sale buyer's walk from their contracts! Although I use an exclamation mark, it is not an unusual occurrence. In fact it seems that it takes 4 contact buyers to make a short sale finally happen. If that was an average for a traditional sale situation, Realtors and title agencies would be climbing the walls.

The general failure of short sale buyers to not close is the fault of the system created by the current finance and real estate sales market - but it needn't be. Just consider:

1. In a traditional sale, if there is a lien on the property does the Realtor negotiate to make the lien go away? Of course not. If there is a lien then the seller should get an attorney to clear the lien.

2. In a traditional sale the buyer is required to make a good faith reasonable deposit to escrow. Why on earth do we see buyer's making a deposit conditional on the lender accepting the "contract" (or whatever it is since there is no deposit). Why do we see $1,000 deposits for $300,000 contracts - that makes no sense either.

3. In a traditional sale the buyer makes inspections within a short period of time. In short sale contracts the "Effective Date" is when the Buyer is told the bank approved the contract for short sale. This encourages multiple contract offers by one buyer on several properties since any can be canceled for no reason shortly after lender approval. Inspections should be done in the traditional way - the cost is a risk to the endeavor by the buyer and the price offered should be part of the consideration of the offering being a "hard contract".

Lenders should encourage a change in conduct by rejecting outright any contract with post lender approval contingencies. That would vastly decrease the number of short sale buyer contracts that will never close - but increase the percentage of short sale contracts that indeed close!

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at Need Short Sale Information? - These Articles Probably Answer Your Question

Posted by Richard Zaretsky, Florida Real Estate Attorney on 03/29/2009 06:41 PM

Comments (37)

SHORT SALE CONTRACTS in the Sales Strategies / Tactics Channel

short sale contract, short sale attorney, short sale lawyer, short sale advice, palm beach short sale

Originally posted at: Z's Legal Short Sale Blog: SHORT SALE BUYER CANCELLED CONTRACT EPIDEMIC - DIAGNOSIS AND CURE

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37 Comments on SHORT SALE BUYER CANCELLED CONTRACT EPIDEMIC - DIAGNOSIS AND CURE

MAR

2009

I do agree with some of your points, but to continue on this path.. .in a traditional sale, the buyer usually knows within a few days that there is indeed a contract for sale. There is no third party to "approve" and allow the sale to go forward.

The unfortunate flip side is that lenders take way to long to give an answer to buyers (and sellers), and all too often, offers from buyers are not approved, files are closed without notifying agents, and buyers do not only not get the property they made the offer on but also lose out on other opportunities in the meantime.

Lenders are demonstrating quite well with the REO properties that things can progess much faster. Another way for lenders to encourage change and increase closed transactions would be to react and decide in a more time efficient manner just like in a traditional sale.

True Silvia - But:

The current cycle is self defeating. If the lenders created a standard - even if it was only "no inspection contingencies", then the garbage buyers would disappear - that is fine by me since we all only spin our wheels on those buyers that are just throwing an offer on the wall to see if it will "stick".

I'd rather work half as much and get 4 times the results.

I totally agree with you Richard! Not sure about your area, but here in my area with so many good REO listings, I rather don't spend any of mine or my buyers time on short sales, specially if there is more than one lien on the property...

Richard, you're right! You make perfect sense. Buyers are being given to much leeway

Interesting perspective Richard. I also agree with Sylvia...lenders need to wake up and smell the coffee!

I just got an approval letter on a short sale listing within 14 days of submitting the offer. I should be jumping for joy however the loan has been sold to a new servicer and unless the buyer can close and the money be in the hands of the current lender in 10 days the deal is off. GEEZZZZZ what are the chances????

Richard,

Law school is showing!

Your suggestions are great, if you're representing the seller in a seller's market. But, half of the brokers in a short sale are representing the buyer, almost always in a buyer's market..

'1. In a traditional sale," the lean is paid, some times negotiate, but paid. Most REALTORS are not prepared to negociate the lien and most don't even try. Providing the requested forms and then sitting on your hands. That's not negociating!

"2. In a traditional sale the buyer is required to make a good faith reasonable deposit to escrow." The deposit is meant as protection from default, but who is most likely to default? The problem here is with the REALTORS accepting listings from people who can't on their own deliver title! True protection would have both side in pearal.

"3. In a traditional sale the buyer makes inspections within a short period of time." In a traditional sale the seller can sell the property! Why should a buyer pay for inspection and appraisals with only limited hope of a closing.

Banks accept short sales because it's in their best interest! Their consideration includes not only the property's current value but the likelihood of collecting from the debtor, regardless of the appraisal and other inspection the buyer is not privy to the seller's credit or the banks position.

Not to long ago it was considered unethical to list a property with out all parties necessary to sell signing the listing! Banks should be required to join in any listing where the likely proceeds are insufficient to clear the title. Listings without the required spouses signature are not allowed simply because you can't deliver title, what's the difference?

In my blogs, I have suggested a solution from the buyer's side and an even better solution from the REALTORS side. There is always more than one way!

Bill

MAR

2009

Richard,

Agree with you on the points. At the same time there is not guarantee, that anything would happen, so buyers are unwilling to start spending money on inspection and appraisal.

At the same time this arrangement set the stage for walking aways if they are tired of waiting or found something else. This also attracts people who place offers on several properties, as they are sure they can walk away from some properties.

Amen! In California, you can open escrow and accept the initial deposit. I think it is a good way to make sure the buyer is serious, don't you?

Richard,

The problem as I see it, is Realtors.... Most lack the education or communication skills to educate Sellers & buyers. Realtors have to understand the motivation of Sellers, who want to avoid foreclosure, and the needs of buyers. Buyers needing to purchase within a short time frame should not consider Short Sales. Realtors who submit multiple offers for one client are clogging the system and frustrating Asset Managers, this is whats contributing to the lenght of the approval process. One of my Asset Managers stated she gets 500 short sale proposals a week and is frustrated because she works these proposals only to find out the buyers walked.

I have my clients pay for termite inspections & repairs. If the property is in bad condition I have them do a home inspection prior to listing the property so I can factor these issues into the listing price. I don't accept offer's from Realtors submitting multi offers and require the buyer to deposit the initial deposit in escrow. Again Realtors need to understand what Fare Market Value is in their local market, I have had my Short Sales approved with the 1st lien holder paying $5,000 to the second lien holder. Realtors need to understand this is not a fire sale. If you submit a reasonable offer with a buyer who is committed & qualified to the purchase you will be able to negotiate the deal.

I disagree with Gary. I am using a short sale negotiator for my listing and we sold the property pretty much at market value. The bank turned it down and the buyers were golden. From what I have seen around here once this goes into foreclosure the bank will probably be $40k more in the hole then they would have if they accepted the offer. Go figure.

RICHARD,

I agree with Gary. I think the biggest flaw in the system is the fact that there is no little or no education done on the expectations of the lenders as to what they require in the acceptance of a Short Sale. In time the buyers walking will become less prevalent that it is today. Many of these buyers are protecting themselves from the self defeating tactics that were being used by agents thinking they were beating the system. The agents that submitted multiple offers brought forth this "protection" tactics by buyers and their agents. They were being taken advantage of and used for the good and greed of those agents.

As the agent population gets more educated and the process becomes more streamlined there will be less of these "walk aways." In the mean time I insist to have the buyers sign an addendum giving us at least 90 days to negotiate and they must submit their deposit in escrow account of our Title Co. We can't force the buyers to put large deposits because of the competition who will not require that condition but at the same time...communication and transparency will help to minimize this phenomenon that is self inflicted.

Richard, In my opinion it boils down to the listing broker not doing their job. There is absolutely no reason why we can't take deposits and start inspections at time of listing. My sellers only accept offers from very motivated and patient buyers. Most are paying cash. If they make an offer with unrealistic time frames we reject it. It really is about educating the buyer and their agent.

Richard - I encourage my sellers to require deposits at seller acceptance. However, are you suggesting that the contract is not a contract when the FAR short sale addendum is used stating the effective date (for inspections,etc) is upon lender approval?

Gene,

The problem I have with using 3rd party negotiators is you lose control of your clients file. Your client hired you not a third party, without negotiating your own Short Sales you really don't know why the Short Sale was not approved.

Wendy,

Most of the Short Sales I've had approved require the escrow to close within 30 days or they charge a per diem. To avoid problems I have the inspections done prior to the listing. Most educated Realtors representing buyers appreciate this because they know the condition of the home prior to writing an offer, so there are no surprises once we get the approval. Our CAR Short Sale addendum also states the effective date for inspections (17 day contingency removal) is upon lender approval.

MAR

2009

Great Responses All !!!

There are several problems that need to be addressed to resolve these problems.

First, if you are using a 3rd party negotiator, be sure they are a competent attorney that is geared up for the short sale process. A Realtor's job is to market and sell - not negotiate. But don't lose control of the process. Be sure you are involved!

Second, if you don't know the value of what you are selling then how can you submit a contract to the seller and lender and then support that contract if the lender balks? Lender's make mistakes and their values are based on some other human being making a possibly erroneous determination of value. Do your homework as if you have to defend the Theory of Relativity and don't try to sell the lender on the Earth being FLAT!!!

Third, the contract is a contingent contract. It is not a hard contract until the contingencies are removed. If there is no deposit until lender approval, I would opine that it is not a contract but instead an intention to enter into a contract (like a non-binding letter of intent) and any listing as the MLS property being "under contract" is legally incorrect.

Fourth, try educating the buyer. If they insist on terms that make no sense in the traditional contract sense - including the price - then the are not a bona fide buyer and you probably have not provided a buyer "ready, willing and able" to purchase and thus not gotten to first base on the duties of the broker under your Exclusive Listing Agreement. For more on the listing agreement and sales addenda see my article on the problems.

Be smart on undertaking a short sale situation and you won't waste time spinning your wheels.

APR

2009

OK Richard, I need some clarity here. You stated this:

"Third, the contract is a contingent contract. It is not a hard contract until the contingencies are removed. If there is no deposit until lender approval, I would opine that it is not a contract but instead an intention to enter into a contract (like a non-binding letter of intent) and any listing as the MLS property being "under contract" is legally incorrect."

Now based on this statement I could assume that I have NEVER had a binding contract in any transaction. I've closed 100s of transactions and every one of them had contingencies in the contract i.e financing, inspection, clear title, insurance availability, survey and etc.. Why would a 3rd party approval contingency make the contract any less binding?

Secondly, a contract does not need a deposit to be binding or valid. So when the deposit is placed or even if it is placed also does not make the contract any less binding.

Our MLSs stat ethat the properties are "pending". That means that the sale and the contract are pending until contigencoes have been removed and bothparties have executed their side of the contract. So my opinion is that stating a property is "under contract" or "pending" is certainly correct and legal.

I agree with your other points.

You know the more I think about this 3rd party approval it strike sme that most deals have always been contingent on 3rd party approval. It's just that it was the buyer's lender that we waited on. Now that the lender approval is on the other side of the transaction it becomes a big deal and changes the way we look at contrcats. Why is that?

Broker Bryant -

The quote you use does say that there is no deposit until there is a seller's lender approval. My thought is that there has to be mutual considerations exchanged by the parties to create a contract. In a traditioinal contract, even if the buyer puts down no deposit, there is consideration such as expenditures or other actions (investigating property and waiving that contingency, for example). In a typical Short Sale contract the buyer does zippo before the seller lender approval. That is not consideration, it is just a signature.

In the traditional buyer lender approval, there is a deposit and the contingency is such that if the buyer does not apply timely or gets a mortgage different in terms from the contract or even seeks to waive the mortgage contingency, the seller can cancel; or if the financing is turned down either party can cancel or the parties can mutually agreed to modify the contingency or even waive it. Those issues are all consideration exchanged between the parties.

In the Short sale scenario, the waivers are all one sided in favor of the buyer. There is no mutual consideration unless the buyer is at risk of "something".

APR

2009

Richard. Hasn't it been established that a the "mutual consideration" in a purchase contract is the seller agreeing to buy and the buyer agreeing to sale (meeting of the minds)? The promise to "do something" is the consideration. The buyer IS at risk of losing "something".....the house.

Do you any case law to back up you stance? I ask because I have never heard or read anything different than what I am stating.

This us a very important topic and needs clarity. I want to make sure we get it right. Thanks

Richard - Bryant is right about "meeting of the minds" - Both Seller and Buyer have agreed and signed the contract, a bi lateral contract, where both sides agreed to follow what is stated in the contract, even if there is no deposit placed in escrow. Clarification on this subject is very important to me too. Thanks

APR

2009

We had one law firm that is a referral source to us now that USED to try and negotiate short sales for clients...bad idea....at $200+ an hour...is that a service to your client ? We don't do legal work and they don't do what the commission is already covering...better for everyone...especially the people payng the bill.

This Meeting of the Minds vs. Contract Deposit is interesting. I was wrong in stating that a "no deposit until Lender Acceptance" resulted in a failure of consideration of the contract.

But the Meeting of the Minds still bothers me from the context of the conditions set by the external party to the contract - the Lender - and the Seller's ability or intentions to meet those conditions. See an interesting case with a twist that discusses Meeting of the Minds.

What I am speaking about is the possible requirment of the Seller having to pay the Lender(s) the short fall in the Short Sale. If the Seller has no intention or no ability to pay that short fall, is not that a failure of the meeting of the minds?

If the short sale addendum contains a clause that makes the Seller and Lender have to come to an agreement on the terms of the short payoff, is not that a further missing essential element (the satisfaction of the liens)?

In my mind there are a lot of ugly questions out there still unresolved that we as attorneys and you as Realtors are dancing around. True, the dance is allowing sales to occur, but from a strict legal standpoint there are problems. For example, if the lender demands a payment of the shortfall under terms the Seller cannot accept and does not accept, then is not that a breach of the contract by the Seller?

This requires a lot more discussion and thought.

Richard, we had a buyer, walk. Have a backup ready to close in 15 days. Same exact terms as the first. Bank wont approve it.

GABE,

That sounds like an example of how we hurt ourselves. I've been writing in these blogs for quite sometime about the bad practice it is to submit multiple offers and submit offers that are just meant to start the process. The lenders have caught onto that and they are now closing files if the BUYER attached to the approval letter changes or is replaced with another name. The agents that decide to take short cuts actually make the process and waiting even worse. They should spend that energy in getting educate on how to maximize their chances of getting the approval the old fashioned way...earning it.

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RICHARD,

You said: "For example, if the lender demands a payment of the shortfall under terms the Seller cannot accept and does not accept, then is not that a breach of the contract by the Seller?"

We use an addendum that clearly states to all parties, including the agents, brokers and buyers, all the possibilities that lie in the acceptance of all terms in the offer. It is contingent on the lender accepting the terms of the contract and the price SUBMITTED by the buyer. I think the buyer will share in the failure to reach an agreement if they don't meet the qualification of acceptance by the lender which is a certain figure close to market value. Market value being an opinion of value set forth by all parties involved.

Yes Sidney, but see my article on the myriad types of short sale "acceptance letters". Not all short sales are created equal !!!!!

LENDER SHORT SALE ACCEPTANCE LETTER EXAMPLES - READ WITH CAUTION!

APR

2009

Richard, This is interesting stuff. By the time we get it all figured out Short Sales will be a thing of the past. Glad I made you think :) Ok I'm off to check out that article on "meeting of the minds"

APR

2009

RICHARD-I did read your post on the acceptance letters when you made the original and I agree about all Short Sales being a separate life form onto itself. I find it alarming, however, how few agents actually negotiate the verbage of the letters to try and make them a little more credit friendly for their clients.

BROKER BRYANT-Unfortunately, unless there is a major change in policy from the Fed Gov't of the Lenders, we still have another three years of these toxic mortgages to get through. (The Option Arm and Atl-A mortgages are set to reset to higher interest rates in high volumes for the next three years...and let's not forget all the FHA mortgages being written today for 95% to 97% of home values that continue to decline on a monthly basis...Short Sales are here to quite a bit longer)

APR

2009

Well, I guess I'm one of the 'uneducated' Realtors® out there because I discourage the buyers I work with from placing funds into escrow before sellers bank approval. I also discourage them from doing any inspections or spending any money at all before it's necessary. Inspections done today for a short sale that might close 3-4 months from now, IMO, are useless. The buyer has used up a precious escape clause. Who knows what the seller might do to the house if they live there or what could happen if the home is vacant for such a long period? I wouldn't do inspections right away myself so why would I suggest someone else do it just so the listing agent can feel more secure? It's no different than having a 'regular' contract and allowing the seller to occupy the home after you close. What protection is there for the buyer? Are we thinking that someone who can't pay their mortgage is in a position to repair/replace things in the house for the next 3-4 months?

As for the escrows, since 95% of escrows are held by the title company and they ALL require signatures by both the seller and the buyer in order to release the funds, who knows where that seller may be in 3-4 months? (I actually had a title company insist that I as a Realtor® sign the release in addition to the buyer and seller. I had to explain to her I'm not a party to the contract and if she keeps insisting I sign something I'm not required to I'll report her....somewhere, lol). Can you get the funds back without both signatures? Yes, eventually but it's a hassle. Why should a buyer who is not able to get the house, through no fault of their own, have their funds possibly held hostage?

As for the seller having to take back a note...on addendums regarding the short sale it is written in that the seller is not able to participate in taking back any note to make up dificiencies and all parties are released from the contract should that be part of the terms of the short sale approval. It's initialed by the parties so everyone is aware in advance.

JUN

2009

I have listed and sold 5 shortsales this past year. Many had more than one loan. The reason they closed was because everyone worked as a team to get them done. I have been working on one with Country Wide since the end of Feb. This has been one of the longer ones and is on its second negotiator. The buyers agent is new to the business and never closed a short sale. She had listened to me up until recently. I have her clients 1,000 in escrow and we extended our closing date to July 6th. The agent never turned in the contract to her buyers lender but kept telling me the lender won't do the buyers Rural loan until the Short Sale is approved. I tired to explain that the loan must be ready to close by July 6th or my client is filing BK. . The agent, lender and buyer are sticking to their guns even when I tell her and the lender it is going to cost the deal. I am now getting backups to hopefully have something in place for my seller. It is very upsetting to do all this work and have them act like this. I had a lender that would get it done for her buyer but they chose to stick with theres. The buyers lender says it will take 30 to 45 days after the Short Sale approval when they have had months. If I had known this I would have taken other offers. No it is crunch time. I read this article and thought it would be educational for others. They are getting a 350k home for 199k. The seller has a 1st and 2nd for 258k. None of the short sales I have done have fallen apart because of a buyers due dilligence to get there loan in order. To me it is a lazy loan officer that is busy on refi's and does not want to "waste time on not a sure thing". The contract has a short sale addendum but not does not have a post lender approval contingency.

http://www.seattleshortsalesteam.com/

Buyers, the asking price for the home may not be your starting point in the negotiations with the lender on a Short Sale. As we mentioned earlier, we usually write the offer for well below the asking price. How you structure your offer is as important as the price you offer. An all cash offer is the strongest offer. And since the lender usually won't do any repairs to the property in a Short Sale, it's best not to have your offer subject to an inspection. Many buyers may want an inspection and we believe that buyers should have an inspection unless they are developers or builders or you know you will be tearing the home down. So if you need to have an inspection then you should do one before you write the offer so the home is not contingent on the inspection. Next is your financing plan. If you are not paying cash and you have to get financing, you must make sure your financing is completely approved by a reputable lender. You will need a current pre-approval stating that your financing is only subject to clear title. When we say current, we mean current, within the week and you need to make sure you get a new letter as the financing market changes.

Then the last element of your offer that is important is the closing date. The sooner the better. But just because you say you can close in two weeks doesn't mean that the lender will even get back to you in four weeks. You must be patient and fixable when dealing with Short Sales. If and when the lender and you finally decide on a price, they may want you to close in 10 days and you need to make sure you and your lender can do that. So if you need to be in the house by a certain date a Short Sales may not be the way to go. Sometimes we can get a better deal on a home where there is equity in the home than we can in a Short Sale. The fun part of all this is that no tow transaction are the same. Just because your friend Joe did it a month ago doesn't mean the same thing can happen today.

JUN

2009

Laurie - thanks for the "real life" examples in your post!

I might add that using a clause in the short sale contract addendum that no other offers can be made to the lender while the diligent buyer's offer is pending will help convince the buyer to do all this work (and incur the expense) beforehand.

JUN

2009

Hi Richard,

Thanks for your response. I absolutely agree with you. That is what makes it even more frustrating because I don't give the banks multiple offers. I don't think it is fair if the seller and buyer agree on a price and have a signed contract submitted to the bank for someone else to come in at a later date and beat them out. I have tried to have everyone work as a team to get the end results best for our clients. I have been working hard on this since the end of February with a 1st & 2nd from Country Wide. we are on the 2nd negotiator and extending closing date to July 6, 2009. The buyers lender won't move forward with the buyers loan until the Sellers lender provides a short sale approval. I have an out of date preapproval letter. At the time the buyers lender said it would be 30 -45 days after the SS approval. No inspections, appraisal , I don't even think they have done much at all.

I just reciened an email back from the buyers agent that she has explained all this to her client and her comment was her obligations are to her client.

I don't know if this is some kind of power struggle but I am going to respond to her with the fact that her clients did not provide a contingency in the contract for a post preapproval of buyers financing and that this type of irresponsibility on her part is going to cost everyone involved to lose. They are very aware that I only took there deal and no one elses. Now I am trying to figure out what I can do because my obligation is to get my clients house sold. I have an out of date preapproval letter from February. I offered a lender with great rates and no junk fees from a bank that would have gotten the loan done on time. They rejected it saying they were sticking with there lender who is in my opinion to busy doing refie's and does not want to work on his clients best interest. I have never encountered this before. My client will hit the roof and threatens to file BK after July 7. He is not going to wait until the buyers loan is done when they should have had it done. Oh well. Any Advice?

I sent the buyers agent a list of all my short sale closing that I had listed and closed in the past year along with this a summary of each senario as they were all vastly different, many with more than one loan and difeerent lenders for each. I also sent her articles and then wrote this in closing.

When I say I am a short sale expert, I mean it. Here is proof to you that I get them done and closed. They take alot of time and this deal that we have is going to blow up because of your buyers not having there loan ready. I have tried to explain to you how these work, I offered a great loan officer that was willing and able to help your buyers get their loan in order. I don't think your buyers nor you understand that if this deal does not close by this contract date my client will file BK and then the deal is gone. It has been difficult enough getting him to stay focused and get me things in a timely manner but I have a buyers agent, buyer and loan officer working against the process. I have explained over and over again and I am trying to prevent the obvious and don't want this deal to fall apart. Since my words to you about how these short sales work and how your buyers loan is suppose to be ready have not been taken seriously I feel compelled to show you my prior listings that have closed that were all short sales as well as can give you references to any of these people that were grateful for my services. I will also find some articles to back up what I have been telling you and then send them to you so you will also realize that I don't just make this stuff up. Linda when the deal goes dead it will also cost me my listing, my 6k commission and more important I did not get the job done which to me will be for unacceptable reasons.

This is her response:

Laurie,
I relies how frustrated you are. I have given my clients the information you gave me. I an sorry I did'nt get back sooner as I had a family emergency. My responsiblity is to my client,s
Linda

JUN

2009

Laurie,

For a buyer to move forward with a mortgage cause some expenses on their part and some investment of time from their mortgage people. Not to mention that their approval of the loan is for about 30 days. Why would they start that clock and spend that money without an approval of the Short Sale by Countrywide? % would advise my buyers not to move until the Approval of the -- is in hand.

As far as your client filing for BK. That will do little to avoid the foreclosure. And if he does the BK before the foreclosure then there could be a higher likelihood his mortgage lender will go after him for the Deficiency.

There might be more panic involved here than necessary. You might want to speak with a lawyer (maybe your title co.'s lawyer) to really see how the BK can affect your client today. Don't go by the lawyer he has, there could be some self interest involved.

AUG

2010

Well, Im going to change the subject to give and get some more insight. I own a Termite and Pest Control Co, in Central CA. We have been losing money right and left when escrows cancel, and it seems that the majority are short sales. Buyers or Sellers contract us out to do the Termite inspection, and then agree to pay for any repairs or treatments Sec 1 and/or Sec 2. We do the work ASAP, because Agents needed it done "yesterday". And I am saying that nicely. Then escrow cancels. No one seems to feel they are responsible for paying. Sellers usually didn't order it, but its an improvement on their property, so I can put a lien on it. Buyers didn't get the house, so they don't want to pay for it but I can take them to court and pay court costs, or send to collections, and I would only get half back and it would ruin their credit. Either way we run the risk of losing our working relationships with our Agents. (I have some great agents) We have our disclaimers on the Payment / Authorization forms, but what happens is sometimes the Agents sign them on behalf of the Clients and or the Banks. I know we all lose money when an escrow cancels, but I have over $3000 dollars in the last month, that no one wants to take responsibility for. Mostly for Fumigations

I was thinking of using a separate form, that buyer and sellers signs. Buyer is responsible for payment, but Seller understands that if payment is not made by buyer, escrow etc, that seller is ultimately responsible. Doesn't sound fair, but what do you do? Collect up front, before work is done? I have also found out that just because there is money in an escrow account to pay for work done, that doesn't mean invoices will be paid if escrow cancels. Escrow has to give the money back if instructed to do so. I found that out the hard way.

Any suggestions would greatly be appreacated.

AUG

2010

Kim

Very difficult and essentially you need to set standards for your operation that are "reasonable" - you don't need agents that don't care about you - they are your "C and D" grade agents - you will make a bigger net dealing with those that understand an appreciate a vendor's outlays of time and expense.

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Richard Zaretsky, Florida Real Estate Attorney

West Palm Beach, FL

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Richard P. Zaretsky P.A. - Board Certified Real Estate Atty

Address: 1655 Palm Beach Lakes Blvd, Suite 900, West Palm Beach, Fl, 33401

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Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.