The Value of a Realtor.....................
Before any of the Realtors in other areas of the country comment on what might seem like a low commission, let me explain. The average sales price of a Single Family Home in my area (San Mateo California) is $865,500 and the average Condo is $345,600. The average commission is 5.02%, which given the high average prices, is pretty good.
NOW, here is my story:
I was working from my home office today, when I got a call from an Attorney I work with. He had, sitting in his office at that very moment, a Home Seller who wanted to back out of a deal to sell his $1.7million home in the San Mateo area.
The attorney explained to me that the Buyer had known the Seller, so they decided NOT to use a Realtor. They wanted to SAVE THE COMMISSION. Since they didn't have a Realtor to guide them, they just downloaded a generic real estate contract from the Internet.
The idea was that the Seller would buy a bigger $2,100,000 home, after selling his current one. The problem for the Seller was that he had just been told by his lender that he could NOT qualify for the loan on the bigger home. (I don't know why the Seller didn't check this out before deciding to sell his current house) The Seller had already been in contract for 6 months.
The Sellers WIFE is now very upset at him because she is losing her beautiful $1,700,000 home, can't buy the $2,100,000 one and will have to rent until they figure out what to do.
The Attorney said that he could not see a way for the Seller to get out of this deal. He called me because he wanted to see if I had any ideas. I didn't have any at the time, but I suggested that the Seller stop by my office and let me go over the contract with him.
After meeting with the Seller, I determined that the contract was not only a poorly written one, but was not filled in correctly. This resulted in the Buyer having lots of contingencies and the ability to back out at ANY time. The Seller had NO contingencies and was basically locked into the deal all the way until the close of escrow.
The contract had been signed way back in August of 2010. All of the buyer inspections, appraisals, etc. had been done and only NOW was the Seller starting to pay attention to what he was committed to.
I basically could not help this guy. I felt bad for him, but the damage was already done.
If he had come to me first, I would have made sure that he met with my lender prior to putting his home on the market. That way, the lender could have told him he would NOT be able to qualify for the purchase of a bigger home and that he should just keep his current one. I would have also made sure that the Seller had a contingency allowing him to back out of the deal if he couldn't qualify for the loan on the larger home.
This guy is basically screwed. He is either going to have an ANGRY WIFE, or it will cost him more than 5% to buy his way out of the deal, or both.
HE SHOULD HAVE CALLED A REALTOR FIRST!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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