I just read an interesting article outlining the problems that one buyer, Alan Jacobson, has encountered by trying to deal with a home owner directly.  My wife, Linda, and I have always cautioned our customers when they stated that they were seriously thinking of buying directly from a seller.  Fortunately, we have never had first-hand knowledge of any problems that a buyer may encounter.  On the other hand, we do have one customer that did decide to do just that...try to purchase property directly from a seller.  He still maintains contact with my wife because he is a builder and is looking to us to market his newly built homes.  To date, he has NOT gotten the deal to closing.  This is about 2 months from when he started.  We don't know if he is running into problems/issues or what the hold up may be (we normally bring all of our transactions to closing within 6 to 8 weeks).  When my wife speaks to our customer all she is told is that the customer and seller have not agreed to a settlement date.  So, who knows.

But back to the article.  As I read the article it amazed me how quickly the deal started to go sour.  There were multiple attorneys involved as well as an intermediary, along with the loan officer and many others.  According to the story, it seems that the seller was allowed to waffle between what he stated that he would do and what he actually did accomplish with the property in preparation to the closing.  It seems that no one was there for Alan to make sure that any verbal agreements were added as addendums to the initial contract.  Not to take anything away from the other professionals that were hired and involved in this transaction, but they were going to get paid regardless if the transaction was completed or not.  Attorneys charge for the time that they spend on your case.  The longer it takes the more they are able to charge you.  Real estate agents, on the other hand, are only paid when the transaction is successfully completed.  If it never completes, we don't get paid.  So, who do you think would be more apt to complete a real estate transaction in the least amount of time and least amount of problems/issues? 

Alan is now in a standoff.  He has spent money that he cannot get back and still does not own the property that he wanted.  The seller, while still under contract to Alan, has put his property up for sale again.  What do you think will happen if another buyer comes along and makes an offer that the seller accepts?  I can forsee this whole situation becoming a larger legal quagmire then it currently is.  Alan has become so disheartened that he created his own web site that outlines everything that he has and is going through.  In summary, Alan has had to endure quite a bit -

1. Buyer makes offer of purchase with addendum for sellers to make repairs. Sale price: $441,000.
2. Buyer and seller agree to use the same attorney to close the transaction.
3. Home is inspected, problems found.
4. Buyer hires contractor to work on third floor.
5. Contractor dies, after cashing retainer check.
6. Buyer hires a second contractor of Middle Eastern descent.
7. Buyer notes progress is slow on seller's repairs, expresses concerns repairs will be completed by closing.
8. Mutual attorney suggests buyer do a walk-through inspection.
9. Seller denies buyer walk-through inspection.
10. Seller threatens contractor and hurls racial slurs.
11. Mutual attorney recommends seller retain separate counsel.
12. Seller hires new counsel.
13. Seller denies lender's appraiser to view the property before closing, then relents.
14. Buyer has property inspected, significant findings threaten sale.
15. After some back-and-forth, seller offers to lower price to compensate for discrepancies.
16. Both agreeing to a new price, $420,000, closing is scheduled.
17. Buyer prevented from doing final walk-through prior to closing due to keys not being available.
18. Second closing scheduled; keys still not available
19. Buyer asks intermediary to talk to seller.
20. Seller tells intermediary - no papers signed, no walk-through; expresses irritation that buyer had "badmouthed" the house.
21. Buyer hires new attorney
22. Buyer's attorney calls seller's attorney several times, gets no response.
23. Finally, buyer and seller attorneys agree to a walk-through prior to closing.
24. Buyer finds during walk-through that all utilities are off, can't inspect mechanics of the house.
25. Buyer told by seller's attorney to call utility company, but only seller's attorney has access to house.
26. Buyer asks for termite inspection; finds inspection report completed 15 days prior to first closing date.
27. Termite report bad.
28. Lender refuses loan until termite problem fixed.
29. Buyer's lock rate on loan runs out.
30. Structural report suggests termite damage extensive.
31. Buyer's attorney requests price reduction to cover new costs.
32. Seller refuses price reduction or to sign a mutual release of liability and termination of the agreement.

Can Alan sue the seller?  Absolutely!  For specific performance.  But now that is a problem because the specific performance would apply to the original selling price of $441,000 and not the re-negotiated price of $420,000, due to the fact that the original contract was not amended to change the agreed to price.  The other problem with taking it to litigation is the time frame.  According to Alan, "So if I sue, I can get the house - maybe three years from now when the case is heard - and pay $21,000 more for it, plus I'm not likely to get all my fees reimbursed even if I prevail.  While I might win in the court of public opinion, my case on strict legal grounds is not as solid according to my attorney, because the contract I signed was not a standard REIN contract," said Alan. "Yet another reason to ALWAYS USE A REALTOR."

So, why doesn't Alan Jacobson just walk away from the deal and take his losses?  In his own words, "A Realtor once told me, 'You'll know you've found your house when you can see yourself living in it.' And that's my problem," Alan said. "I can see myself living in that house. I can see my girls in their new, big bedroom that my girlfriend offered to decorate. I can see the girls running up and down the stairs. I can see us entertaining in our new dining room - the most elegant room in the house, with high ceilings, crown moulding, a window seat, etc. I was even looking forward to working with the contractors to redo all the floors, finish off the exterior, etc. So it's tough just to walk away from this deal."

But I can't do justice in explaining the whole situation.  Alan does a much better job on his site, FSBOgonewrong.com.