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Just sharing a frustration on our selling process. I'm a very analytical person, so maybe someone can give some insight into something I'm missing here or it was just cold feet from the potential buyers.

We live in the DC metro area which is low volume and currently a sellers market. Prices are just starting to rise here over the last 6-9 months and looks like a lot of renters are trying to get into homes at today's rates. We interviewed a few realtors and found a pair that worked together that we really liked. The one who would be in charge of selling had a system that looked great. He does a lot of leg work to get bidding wars going the first weekend on the market, and with such little inventory it is important to pick just the right price. We were looking at our house selling in the $430-440K range, and before telling him what we wanted to list for he recommended $435K thinking that we'll get multiple people putting offers down the first weekend and could end up with closer to $440K. We were happy.

Our house went on the market Friday morning, the first people waiting in line to view it were a couple that we'd seen driving by our street all week looking at the "coming soon" sign in our yard. They got in to see the house Friday morning and put an offer down immediately for $443K (8K over listing) with 25% down and waiving the inspection and appraisal contingencies. This was just way too good to not accept. We had 3 others very interested that first day and one was in the processes of putting together and offer, but we accepted the 443 an hour before its 7pm deadline. The next day our Realtor still did the open house and there was more interest but most people didn't bother because the sign already said "under contract" in the front yard. Realtor was trying to get a backup offer going but most people saw what they've seen everywhere else. The houses go fast that are priced appropriately.

Fast forward to today, we get news this morning that they are backing out a few hours before their 3 days are up to do so. The reason they list is "upon review of HOA documentation" which our realtor tells is is typically what people fall back on when they need an excuse to back out. He said, they really didn't need to give a reason - but the fact that they did shows they want us to think it is for a specific reason.

Question... is this a case of cold feet? Guess we'll never know. I can't help but wonder if this person was attempting to undermine our ability to get a bidding war going on opening weekend. Is that they they set the 7pm deadline to accept their offer the night before we were to have our first open house?). We spent a lot of time and energy getting the house is pristine showing order, and now our opening weekend (open house) seems to have been a waste as the serious buyers all saw it wasn't worth pursuing since we were already under contract. We even stayed the whole weekend at our parents house out of state to allow the realtor time to do what he does best and let the home sit in pristine showing shape.

Our realtor is reaching back out to all of those people now to let them know we're back on the market, I'm sure we'll get another offer in today - or soon, but I also can't help but think they will be back down near listing price now $435K as people will wonder if something is wrong with the house for the first offer to have fallen through.

Is something like this pretty standard? I'm not questioning it legally. I understand the rules in place giving people 3 days to review things and back out... but as my realtor said, to do something like this is really poor on their part. If you're so quick to jump at throwing an offer out like that to get us off the market in the first 24 hours we're available and then fall through on something like "HOA docs" that means they really didn't do their homework (highly unlikely), or they really shouldn't be fronting a stance of aggression like that at getting a house that is clearly going to sell fast.

Frustrating to say the least. :\
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I had this happen selling in NJ. You think the place is sold and stop showing it. Then the buyer cancels and want to renegotiate. I think its a negotiating tactic.

If you got an offer quickly and had several showing interest, putting your house back on the market should not be difficult. And perhaps you can even get competitive offers and a bidding war.
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Cold feet? Probably, but what do you expect when a big purchase decision like this is rushed through fear of being outbid? Having given up inspections, they had little opportunity to back out and retain their deposit other than the 3 day HOA period. And perhaps they were worried that they over bid, given that they offered over list and were accepted without counter.

I understand your frustration, but be glad that it happened so close to the start of the process, rather than after weeks off the market. You still have plenty of the hot Spring sales market to have someone else pick the place up.

If I were your agent, I would remove it from the market entirely, and relist as "new" once again, along with another open. That should hopefully get your momentum back. It's a rising market...you should do fine, but if there was that much interest right off the bat, look at your pricing seriously to see if you need to raise your price.

IP
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I had this happen selling in NJ. You think the place is sold and stop showing it. Then the buyer cancels and want to renegotiate. I think its a negotiating tactic.

I may be naive, as I'm not old enough to have lived through a market I'd want to sell into (I was late to the home accumulation game, and I've retained all the homes I've purchased to date,) HOWEVER...

Why stop showing a home prior to any particular offerror's contingencies clearing, and earnest money going hard? It ain't a deal until the check clears, but there ain't even a commitment until the earnest money is "earnest."

When we're showing rentals, we keep showing & taking apps until we have an applicant who's moved in. We take diligence/credit-check/app-fee checks with each rental app, but only cash the 1st keeping the rest on standby in order of arrival priority.

If/when I sell, I plan on doing the same.
Dave
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You think the place is sold and stop showing it. Then the buyer cancels and want to renegotiate. I think its a negotiating tactic.

I'm really hoping that was not their intent. We know the name of the person now and their realtor. If they submit another offer, or anyone else under that same realtor, they'll receive a lot more scrutiny than others. We'd demand a lot more from them, just for pulling a stunt like this.

Cold feet? Probably, but what do you expect when a big purchase decision like this is rushed through fear of being outbid? Having given up inspections, they had little opportunity to back out and retain their deposit other than the 3 day HOA period. And perhaps they were worried that they over bid, given that they offered over list and were accepted without counter.

I understand your frustration, but be glad that it happened so close to the start of the process, rather than after weeks off the market. You still have plenty of the hot Spring sales market to have someone else pick the place up.

If I were your agent, I would remove it from the market entirely, and relist as "new" once again, along with another open. That should hopefully get your momentum back. It's a rising market...you should do fine, but if there was that much interest right off the bat, look at your pricing seriously to see if you need to raise your price.


I think you're probably right. At least I hope so. I am somewhat kicking myself now for not going with my gut Friday night, which was to thank them for the great offer but tell them they hadn't even shown the house yet and would hope it was still valid the following night as well. We just couldn't pass on the no inspection/appraisal part. The offer really was written as an almost too good to be true type thing. Hindsight...
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I won't look at a place that has accepted a contract on it. There are plenty of other fish in the sea. Most people still keep it on the market, doing what the OP's agent did and marking the listing as "under contract, accepting back ups," though I would never advertise that on my front lawn. That kind of advertising is only for the Realtor, trying to get the OP's neighbors to list with him since he did such a bang up job getting a contract that fast. It is of negative benefit to the seller.

IP
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When you are looking to start a bidding war, often it is stated that contracts will not be considered until a certain date, like the day or two after the open. Otherwise, you wind up missing the war.

IP
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Is something like this pretty standard? I'm not questioning it legally. I understand the rules in place giving people 3 days to review things and back out... but as my realtor said, to do something like this is really poor on their part. If you're so quick to jump at throwing an offer out like that to get us off the market in the first 24 hours we're available and then fall through on something like "HOA docs" that means they really didn't do their homework (highly unlikely), or they really shouldn't be fronting a stance of aggression like that at getting a house that is clearly going to sell fast.

I'm a little less generous as the other posters on why they did what they did. I think they hurried up with an offer to take your home off the market for three days as they continued to look at other houses in the meantime. Your house was a fall back position if they didn't find something else better out there in the market. They're probably indecisive people who kick the front steps of a bunch of houses.

PSU
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I'm in the DC area, so here's two recent anecdotes:

1 - my mom's SFH - the first contract to sell her house ended up falling through a couple days before closing (they said it was over their finance contingency). VERY frustrating for her, since it went under contract end of May and this was beginning of July when it happened - so peak time was already up. Luckily it sold in October for just a couple thousand less than the July offer.

2 - ex-bf just sold his TH. He and his realtor put it on the market on a Thursday, and they advertised any submitted offers will be evaluated at 5PM Monday. So similar tactic - they're trying to get multiple offers, and this way no serious buyer can say "I need a decision on this offer by....". He did get multiple offers that weekend - he didn't end up going for the highest one, he accepted the next highest because the financing looked stronger, and the closing was last week.

So good luck, and when you re-list I'd try tactic #2.
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VTAlumni: "Just sharing a frustration on our selling process. I'm a very analytical person, so maybe someone can give some insight into something I'm missing here or it was just cold feet from the potential buyers.

We live in the DC metro area which is low volume and currently a sellers market. Prices are just starting to rise here over the last 6-9 months and looks like a lot of renters are trying to get into homes at today's rates. We interviewed a few realtors and found a pair that worked together that we really liked. The one who would be in charge of selling had a system that looked great. He does a lot of leg work to get bidding wars going the first weekend on the market, and with such little inventory it is important to pick just the right price. We were looking at our house selling in the $430-440K range, and before telling him what we wanted to list for he recommended $435K thinking that we'll get multiple people putting offers down the first weekend and could end up with closer to $440K. We were happy.

Our house went on the market Friday morning, the first people waiting in line to view it were a couple that we'd seen driving by our street all week looking at the "coming soon" sign in our yard. They got in to see the house Friday morning and put an offer down immediately for $443K (8K over listing) with 25% down and waiving the inspection and appraisal contingencies. This was just way too good to not accept. We had 3 others very interested that first day and one was in the processes of putting together and offer, but we accepted the 443 an hour before its 7pm deadline. The next day our Realtor still did the open house and there was more interest but most people didn't bother because the sign already said "under contract" in the front yard. Realtor was trying to get a backup offer going but most people saw what they've seen everywhere else. The houses go fast that are priced appropriately.

Fast forward to today, we get news this morning that they are backing out a few hours before their 3 days are up to do so. The reason they list is "upon review of HOA documentation" which our realtor tells is is typically what people fall back on when they need an excuse to back out. He said, they really didn't need to give a reason - but the fact that they did shows they want us to think it is for a specific reason."


I am not familiar with the DC "standard" contract, but when i read "waiving the inspection and financing contingencies" to mean that there are no contingencies in the contract. Was there a title review contingency?

"Question ... is this a case of cold feet? Guess we'll never know. I can't help but wonder if this person was attempting to undermine our ability to get a bidding war going on opening weekend. Is that they they set the 7pm deadline to accept their offer the night before we were to have our first open house?)."

Hanlon's Razor suggest that one should "never attribute to malice that which is adequately explained by stupidity". You will probably never know unless you ultimately do deal with these people and get to observe them and know them better.

Not to beat a dead horse, but you could have responded with either a request for more time (i.e., until after the open house) or no but they are welcome to re-submit after the open house. What did you realtor suggest? The otehr adage to recall is a bird in the hand is worth two in the bush. Or in real terminiolgy, there may never be a better offer than the one you already have.

Good luck. Regards, JAFO
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Why stop showing a home prior to any particular offerror's contingencies clearing, and earnest money going hard? It ain't a deal until the check clears, but there ain't even a commitment until the earnest money is "earnest."

In my experience of selling homes (7 of my own and 4 inherited) once the status changes to 'pending' or even 'pending, taking backup offers' - it's generally not that the seller is unwilling to continue showing (although some sellers are very happy to not have to keep their home in show-ready condition, so they may be unwilling to show), it's that the buyers are unwilling to look. In really hot markets, this may be different, but my most recent sale was into a pretty hot market (11 showings scheduled in the first 4 days, under contract in 4 days, closed in 33 days) and the showings being scheduled dried up as soon as the 'pending' status went up - I only got one more showing request scheduled, and that was on the same day that the status got changed, so it may have been before the status actually changed.

When we're showing rentals, we keep showing & taking apps until we have an applicant who's moved in. We take diligence/credit-check/app-fee checks with each rental app, but only cash the 1st keeping the rest on standby in order of arrival priority.

Different process, often with the 'pending' status being unknown to the potential renter until they actually come to view the property and attempt to submit the application.

OT - what do you do with the 'standby' checks once a renter moves in? Return them, destroy them, something else? Personally, I don't think I'd bother to fill out a 'standby' rental application if I had to leave a check.

AJ
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Hi AJ,

You bring a valid (obviously) perspective given that home showings are generally driven by MLS-focused Realtors®, who are more likely to direct their captive buyers to non-pending listings (if nothing more than to save their own professional time.)

When we advertise rentals and get responses, we *ALWAYS* tell folks right up front "we do have an app with deposit in hand, but you can take a look as a backup if you want." We don't want to waste anybody's time either.

OT - what do you do with the 'standby' checks once a renter moves in? Return them, destroy them, something else?
Pretty much whichever they prefer (which is usually 'destroy it.')

Personally, I don't think I'd bother to fill out a 'standby' rental application if I had to leave a check.
Yep, it cuts away those who are unsure or insufficiently motivated, for sure. Of course, we let the primary applicant know when there are paid backups... it definitely has a setting effect on the primary applicant.

Also of course, all of this 'paid backups' business is only possible in a landlord's market... which, fortunately, we are smack in the middle of at present.

Dave Donhoff
Leverage Planner
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Why stop showing a home prior to any particular offerror's contingencies clearing, and earnest money going hard?


On the home I bought, my realtor and I put in the contract "seller will stop marketing the property and update the listing to 'under contract'", since the seller (it was a relocation company) originally had wording that they would keep marketing the property until closing.
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What are the odds this happens twice in a row. I think we have right to legal action this time. Sure enough another buyer submitted a contract the same day our last one was backed out of. His Realtor didn't do a good job though and included our washer/dryer as a part of the sale. It clearly stated in every part of our sale that they did not convey. Normally I wouldn't mind, but we spent $2,500 on them and they are less than a year old.

So Tuesday he got the 'counter' from us stating the same conditions he listed ($500 over selling, no inspection) without washer and dryer. He was informed by his Realtor and waited two days to sign, while trying to negotiate the price down thinking he was getting a raw deal from no washer/dryer (putting myself in is shoes I might feel the same, but that is their fault for not reading the documents and brochures). He finally sent back a revised counter agreeing to $500 over asking, no washer/dryer (as it always should have been) but added the inspection contingent back in waiving the right to ask for anything to be fixed that wasn't over $2,500 cost to him - with 7 days to schedule inspection and needing to notify us immediately. We had no problem with this since our house is only 7 years old. What could possibly cost $2,500 to fix... a new roof? haha.

We signed Friday morning. Contract specifically states that he had to deliver by hand written notice to sellers residence by 9pm 3/11/13 in order to back out by the 3 day rule. It also specifically lists that notifications to brokers and agents is recommended but does not represent formal intent between the seller and buyer. Pretty iron clad verbiage.

The seller's broker sent an e-mail to our Realtor at 7:45 stating his intent to back out (no reason listed) and then followed up by texting from his phone a picture of the contracts front page with red crayon across the front written "withdrawn". Our Realtor called us immediately, around 8:30pm (30 minutes from the deadline) to tell us that he thinks this guy is getting horrible representation from his Realtor, who just got his license within the last few months. Our Realtor is going to conference call us tomorrow with his lawyer and thinks we'll have no problem going after the $7,000 earnest deposit, if we choose to.

Ugh, what a nightmare. I kind of feel bad for the guy, hopefully he can sue his own Realtor, but at the same time here we are in a sellers market with our house missing two straight weekends because of the same thing... someone getting cold feet and backing out. Why put a contract on a house you aren't serious about buying?

This weekend we are going to tell buyers that we refuse to sign with anyone until reviewing all contracts by Monday evening. No more of this taking offers above asking that demand we remove it from the market immediately and ignore all others offers. Hopefully we can use that to evaluate potential of buyers and their ability to follow through with their bids.

Stress :(

At least we're not working with a deadline on this, just hate that our house now might look like a lemon to other interest buyers.
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I have no words but that I am so sorry. I, certainly, understand your frustration and stress.


Robyn
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His Realtor didn't do a good job though and included our washer/dryer as a part of the sale. It clearly stated in every part of our sale that they did not convey. Normally I wouldn't mind, but we spent $2,500 on them and they are less than a year old.

So Tuesday he got the 'counter' from us stating the same conditions he listed ($500 over selling, no inspection) without washer and dryer. He was informed by his Realtor and waited two days to sign, while trying to negotiate the price down thinking he was getting a raw deal from no washer/dryer (putting myself in is shoes I might feel the same, but that is their fault for not reading the documents and brochures). He finally sent back a revised counter agreeing to $500 over asking, no washer/dryer (as it always should have been) ...


Your Realtor should have explained to you that nothing is off limits to ask for in a contract, and this guy did nothing wrong by asking for the washer dryer, just as you did nothing wrong in saying No. I often ask for and receive things that are not included in the listing, and in fact there is no uniformity in contracts even between different areas within a state, certainly none from state to state. If you do not list what you want in your contract, even if it is posted as included in the listing, it can be considered that the seller does not have to give it to you. Heck, I've gotten to the point where I even specify the range, which is conventionally conveyed with the house in every single market I've looked in, as when I was doing the walk through for the last place I bought the seller asked if I was taking the range, or should he clear it out. One contract we recently submitted quite clearly instructs that if you do not list things in the inclusion part of the contract, it will not convey regardless of the listing. The listing is subject to errors and omissions, not really a legal document. It is even a classic ploy in our area for sellers to withhold inclusions of any appliances other than range or built ins like dishwashers, holding them back as negotiating tools for a higher price. Besides, who wants to move a large appliance, particularly if you are not being moved and have to do it yourself? Better to buy new and have the store deliver and install if you can't get the one at the house you are buying.

Yes, it sounds as though neither the buyer nor his agent actually read the contract and understood it line by line. I wish I could be more astonished by this, but find it to be more the norm than not. And while you are perhaps entitled to keep the escrow, while your broker figures out their legally required position, your property is probably going to be unmarketable, so your best bet may be to let him go if you want to rescue the spring market. I'm seeing articles on inventory in the DC area finally being on the rise, so ponder this potential delay in marketability seriously. In the very least, the buyer will sue both agents and you to get the money back, and while the insurers for the agents may or may not cave and settle, it will tie your property up.

So the question is, do you want to be right, or do you want to sell your house in a timely manner?

This weekend we are going to tell buyers that we refuse to sign with anyone until reviewing all contracts by Monday evening. No more of this taking offers above asking that demand we remove it from the market immediately and ignore all others offers.

I would have thought you would have communicated this to your agent after the first buyer backed out.

IP,
just back from house shopping in VA
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Update: Buyer and inspector did not show up this morning as planned. Not a surprise. Just had a conference call with the Realtor and his lawyer to discuss options.

First plan of action is to have our Realtor contact theirs and ask why they didn't show up for the inspection, indicating that they only have 3 more days before that contingency passes. He'll also point out that he got some e-mails and photos indicating what appeared to be intent to back out but that his sellers (us) never received formal documentation as outlined by the contract. That we are still in the dark, because we have a contract and if seller wishes to default we'd like to know asap so we can get it back onto the market. We'll have lawyer send a notice to seller mentioning that if he chooses to breach contract that we intend to go after the $7,000 Earnest money, but that our intent is still to sell the home to him.

We're guessing that buyer will either continue on with purchase of home, or will make it obvious that he doesn't want to move forward. At that point assuming he has valid reason to sue his own Realtor for the mistake. Lawyer thinks that the buyers Realtor will then try to settle things by offering us payment (something in the $2-5K range) to avoid litigation. That would be the least messy route and we'd be back on the market this weekend.

Alternate route would be if buyer doesn't want to move forward with our contract and wants to fight to keep the $7,000... then we will send notice that his insistence on taking this to court could end up costing him more than $7,000 and that we wish to move forward selling to someone else. Later we will sue him for whatever less we receive compared to his offer (if we end up selling for $15K under our asking, the difference would be on him). At that point we'll point out to him that it is in his best interest to let us move forward with trying to sell our home to someone else, if we get asking price again we may let him go on the 7K Earnest. Ball seems to be in our court.

I asked what happens if a Judge deems that seller shouldn't be out the $7,000 for a mistake his Realtor made on his behalf. Answer was that we could then use VA laws to go after Realtor for the damages inflicted on the difference in our sales price vs what the contract stated.

I know what you mean about not wanting this to drag things out. Our settlement date on this contact is April 15th, so I imagine it can't go beyond that without us being able to sell to someone else. I'm not a lawyer though.

What ever happened to the days when a contract was a contract. It's almost as if people think this is a game they can play. Like this guy was never really serious about the house but just liked the thrill of putting an offer on it to waste our time? Not that this should matter, but both cases we were dealing with what appear to be first generation immigrants that come from cultures where bartering seems to be more typical. I guessing either fully understands the ramifications of these legal contracts they signed themselves into.

Will update as more info comes.
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You may be limited by your contract as to how much you can pursue the deposit money in court. What does it say, on the front and back pages of your contract, regarding disputes? Many contracts we have reviewed state that mediation is the course to follow in the event that the buyer and seller can not agree who gets the deposit back. Court tends to be in the very distant future if it is even a possibility.

Any dispute will be a loss for you, since you typically cannot market a property that is in dispute.

Good luck with this process, but for my money I would walk away and get more strict with your listing agent about how you want to handle contracts. This happening once is understandable. Twice??? Starts to make people wonder what is going on with the property.

IP
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Update: Looks like the Realtor who works above the one who made the mistakes was caught off guard today when she received the call from our Realtor. She understands that gravity of the mistake and indicated that the buyer got cold feet in the 11th hour after using Google to search for litigation articles between our HOA and internet service provider (every member of the community was assessed an extra 13th HOA payment last year to hire a lawyer to represent the community - summary is that we were developed by one builder who binded the community to a 75 year Monopoly contract with our ISP... the ISP has been lagging other providers (less HD channels, blah blah blah) in technology advances because there is no incentive to keep up - we are a cash cow for them. Community won the case, and ISP is obviously appealing, the contract was scheduled to be terminated this summer but might go another year because of the appeals). She feels he got spooked because of the lack of time to review things (guess three days wasn't enough to traverse all of Google), and feel confident that if he spends time to talk to the HOA president about his concerns that he'll have no problem moving forward. Makes sense that everyone involved now is moving towards pushing this through, to cover themselves and get paid.

There should be more communication in the morning after buyers Realtor has time to talk to the buyer and sort out where he stands on all of this. I indicated to our Realtor that we would still like to sell the house to him, but if his intent is to back out of the contract and fight for the earnest money back, he will do himself a lot of favor by submitting something in writing to us formally indicating his intent to withdraw from the contract... hopefully freeing us up to entertain other offers. We told him we would like this decision to be made prior to Friday so that we do not miss another weekend off the market and potentially more damage.

I'm not out to gouge this guy. I am pissed that this has now happened twice and feel that at the very least half of the earnest money needs to be turned over to us, should his intent be to back out. Guess we'll see where this goes. If what IP suggests is really true, and we are stuck not selling our house during this whole litigation process than we would obviously rather avoid that. That'll be a question for our Realtor's lawyer if we find out in the next day or two that this buyer really has no interest in moving forward with this.

Below are the highlights of the contract.

Deposit: The Deposit will be placed in an escrow account of the Escrow Agent after Date of Ratification in conformance with
the laws and regulations of the appropriate jurisdiction and/or, if VA financing applies, as required by Title 38 of the
U.S. Code. This account may be interest bearing and all parties waive any claim to interest resulting from the Deposit.
The Deposit will be held in escrow until: (i) Credited toward the Sales Price at Settlement; (ii) All parties have agreed
in writing as to its disposition; (iii) A court of competent jurisdiction orders disbursement and all appeal periods have
expired; or, (iv) Disposed of in any other manner authorized by the laws and regulations of the appropriate jurisdiction.
Seller and Purchaser agree that Escrow Agent will have no liability to any party on account of disbursement of the
Deposit or on account of failure to disburse the Deposit, except in the event of the Escrow Agent's gross negligence or
willful misconduct.


Default: ... If either Seller or Purchaser refuses to execute a release of Deposit ("Release") when requested to do
so in writing and a court finds that such party should have executed the Release, the party who so refused to execute
the Release will pay the expenses, including, without limitation, reasonable attorney's fees, incurred by the other party
in the litigation. Seller and Purchaser agree that no Escrow Agent will have any liability to any party on account of
disbursement of the Deposit or on account of failure to disburse the Deposit, except only in the event of the Escrow
Agent's gross negligence or willful misconduct.


DELIVERY: Delivery, "delivery" or "delivered" methods may include hand-carried, sent by professional courier service, by United States mail, or by facsimile or e-mail transmission. The parties agree that Delivery will be deemed to have occurred: on the day delivered by hand, on the day delivered by professional courier service including overnight delivery service, or by United States mail, return receipt requested, or on the day sent by facsimile or e-mail transmission, either of which produces a tangible record of transmission.

Delivery methods are defined as follows:
A. Address of Seller: (property address here)
or by facsimile to Seller at (blank)
or to e-mail to Seller at (blank)
(Seller address and e-mails are listed after that)

COURTESY COPIES: Copies of any addenda, amendments, termination, or Notice required by the Contract will also be provided as a courtesy to the Brokers at the following fax/mailing address/email address. The parties agree that such courtesy copies sent to the Broker will NOT constitute Delivery.
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So we're finally at the point where we can re-list. This second buyer has acknowledged that he has no intent to buy the house, which allows us to move forward with finding another buyer. We are going to only go after his Earnest if we end up selling for less than his offered price... which probably won't happen.

We're going back on the market today, and stating that under no circumstances will we follow-up on offers until Monday.

Question:
Is it bad (what are the ramifications?) of raising the asking price of our house at this point. We've been on the market for 21 days (but under contract 19 of those, both times falling through), and I notice that other properties are going under contract relative to their county tax records in a range that should put our house valued at 7-10K higher than what we are listed at now. Inventory is still extremely low. Out of the 5,000 homes in our development, only 1 other is listed for sale that is a townhouse like ours. Their price relative to ours would put our sale price at 20K higher. Clearly they are over listed by a bit.

I briefly brought this idea up with our Realtor even though I already knew his stance would be to push back hard against raising the asking price. His basic stance was "we decided that $435K was good 3 weeks ago and I don't see anything out there right that that has changed to warrant moving the price up"... that said, I know his life is easier with a lower asking price.

Zillow... which isn't the most accurate, shows that our development (and the house) have gone up $6K in value over the last 21 days)
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Adding more fuel to the fire... my wife was at our local grocery store this weekend and overheard another Realtor on the phone with her client as she was picking out fruit. She only got a short part of the convo, but it was

"Look we need to move fast if we want to snag this property. Lets just put and offer in a little above asking and wave the contingencies. That'll take the place off the market through the weekend. We'll have three days to back out by claiming HOA docs."

I guess this is a common practice these days. :\

My wife got the card of the Realtor (pretending to be an interested buyer). We're still deciding if we should pass it along to our Realtor or not... if this is a common practice these days, he might not care to spread word about her.
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That is pretty disheartening. I am sorry that this seems a common practice. It just appears to pull in the lowest type of behavior.


Robyn
My mom was a Realtor and broker and ethics were what she based her reputation on. She didn't work with some buyers because of it.
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VTAlumni: "Adding more fuel to the fire... my wife was at our local grocery store this weekend and overheard another Realtor on the phone with her client as she was picking out fruit. She only got a short part of the convo, but it was

"Look we need to move fast if we want to snag this property. Lets just put and offer in a little above asking and wave the contingencies. That'll take the place off the market through the weekend. We'll have three days to back out by claiming HOA docs."

I guess this is a common practice these days. :\ "


I am still at a loss as to how a contract with no contingencies has an HOA docs. back-out?

Any chance you can post the relevant contract language; I am curious.

Also seems to me that unless the HOA docs. backout is a statutory requirement, once could simple insist that HOA docs. be reviewed first, and there be no HOA backout.

Regards, JAFO
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Appears that there is a VIRGINIA PROPERTY OWNERS’ ASSOCIATION ACT.

http://www.wtplaw.com/sites/default/files/document_pdf/Virgi...

I didn't read the entire thing, but the parts that are snipped and put into the contract indicate that the buyer has to provide full HOA documents at time of Ratification and that the buyer had 3 days to review the documents and can back out at any time from them.

I'm not sure this is something that can be waived in the contract. Sounds like it is something that stemmed from the policies currently in place to protect people from predatory lending and high pressure sales tactics. In line with the 3 day back-out policy for buying timeshares, or signing refinance documents with a lender.

Probably a good idea in theory... in practice it opens up abuses in the other direction, at sellers expense.

What is currently working against us is that our HOA is in a very high profile legal battle with an ISP, OpenBand, that has exclusive rights to service in the community. Our community itself is a very sought after part of the region, regarded as one of the best places to live (pools, amenities, trails, business, etc...).

To make a long story short, back in the mid to late 90's our region was farmland on the outskirts of DC metro area. When a builder came here, they looked at bringing the latest and greatest in internet, phone and TV. The Builder signed a contract with OpenBand giving them 75 years exclusive rights to the community and a couple others to put in a 10mbs line. Back in the time it was unreal speeds and our community was lauded as one of the most tech savvy areas to settle into. OpenBand put in all the money to lay the expensive infrastructure knowing they'd make up for it by being guaranteed $150 a month per house for 75 years. 10 years later, we're in the mid 00's and FiOS emerges as well as a lot of other high speed options. People start to complain that OpenBand isn't keeping up with competition and they don't need to because they have exclusive rights, a monopoly over the community.

A few years ago the HOA filed a lawsuit against OpenBand and won with support of FCC rules that went into place in 2007 specific to our development... stating this was a Monopoly. Our county courts ruled in the HOA's favor and the contract was to end in summer of 2013. OpenBand decided to not only appeal but sue the HOA and County for 50 million.

This forced our HOA to hire lawyers to fight a case and caused our HOA fees to go up $30 a month.

Everyone in our region knows about the legal issues between the HOA and ISP, so this doesn't really explain the backing out behavior... but I think it is part of the reason that Virginia now has this Act in place giving the 3 day backout period.

This second guy is from a city only about 20 miles away and should have been well aware of the community HOA situation, but apparently went online last weekend and spooked himself reading all of the articles about it. In his case, I believe he really just didn't do his homework ahead of time and was probably pressured by his agent to move quickly. That doesn't excuse him in my mind, if we end up getting damaged from this.

An article about our community just got published on Reddit last week. Interesting read if any of that caught your interest:
http://www.reddit.com/r/technology/comments/1aa2da/virginia_...
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Is it bad (what are the ramifications?) of raising the asking price of our house at this point.

Depends on if you NEED to sell. If you can take the risk of it taking more time, then up the price. You have had two contracts thrown at you, indicating price could be too low, but then hastily backed out of, indicating it could be priced too high. Not knowing the property, we don't know enough. It is always easier for an agent to sell a lower priced property than a higher price, and the motivation for the small increment in commission is not nearly as high as the increase you will see in cash from raising the price. You will have to be firm if this is what you want to do.

41% cheaper to buy than rent in the DC area: http://dc.urbanturf.com/articles/blog/trulia_buying_is_44_pe... Buyers are motivated.

IP
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"Look we need to move fast if we want to snag this property. Lets just put and offer in a little above asking and wave the contingencies. That'll take the place off the market through the weekend. We'll have three days to back out by claiming HOA docs."

I guess this is a common practice these days. :\


Always has been. Good news for you is that once someone actually goes to the effort of putting in a contract, they usually see it through, assuming their Realtor is at all capable of managing their client's emotions. This has always been a common encouragement to get buyers over the hurdle of putting in a contract. People generally don't back out because of HOA. Heck, most don't even look at the typical 100's of pages of documentation they receive.

JAFO, many states have a mandatory timeframe for back out after receiving HOA docs. It is a state legal requirement in many places, rather than a discretionary clause in the contract. A good listing agent will have the docs on hand to give to the buyers with contract to minimize that time to back out. It can also cost quite a bit to get those docs, depending on the hoa.

IP
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Hey VT Alumni, taking Youngest to VT this week to check out the school on Spring Break. Anything in particular we should scope out?

IP
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I didn't read the entire thing, but the parts that are snipped and put into the contract indicate that the buyer has to provide full HOA documents at time of Ratification and that the buyer had 3 days to review the documents and can back out at any time from them.

I'm not sure this is something that can be waived in the contract.


State law...can't be waived.

What is currently working against us is that our HOA is in a very high profile legal battle with an ISP, OpenBand, that has exclusive rights to service in the community.

What about pre-emptively disclosing that? I hate the VA disclosure. You sellers are allowed to basically thumb your noses at buyers and shout at them BUYER BE WARE. PA disclosure law is tough on sellers making them disclose all they know. The good thing is that when you get a contract here, they know they want the place. It's one of the first docs I ask for when looking to buy in PA, but I don't bother in VA.

IP
often checking out a disclosure here in PA even to decide if I want to look at the property or not
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Hey VT Alumni, taking Youngest to VT this week to check out the school on Spring Break. Anything in particular we should scope out?

Great school. Had a fun 4 years down there. Notable places of interest, Torgersen Bridge:
http://www.vt.edu/about/buildings/images/M_torgersen-bridge....

I spend many hours studying in the library area that makes up that bridge. Great views of the drill field that separates the dorms from campus.

Of course, Lane Stadium and Cassel Coliseum. Attending the sporting events there were the highlights looking back... in the moments I could get away from all the studying and course work (Engineering is not easy).

They have an amazing gym facility called McComas and West End was rated as one of the best dining facilities in the country 10 years ago when I was there.

As for off campus stuff to check out. I highly recommend driving west down 460 a little further (opposite direction than you likely came into town) and look for a sign on the right that says Jefferson Forest. About 5-7 miles from campus. On the left will be an entrance to Pondapus Pond. I used to drive there at least a couple times a week to hike and run. They have hundreds of miles of trails and this time of year the weather is incredible (may still be a bit on the colder side until April).

Downtown, check out PK's - great pizza. Used to be a REALLY good mexican place off of Main street called El Guadalupes. Seriously the best Mexican I've ever had. Still have yet to find a place that can match it. Unfortunately, I think its closed, or at least that was the rumor. I haven't been to campus in 5 years and they are building like crazy. Probably a lot of newer stuff that I don't even know about.

Enjoy the trip.
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Enjoy the trip.

Thanks. We love the area. We have a place on Craig Creek near Roaring Run, surrounded by the Jefferson Forest. At some point, we will live there full time. First we have to get Youngest through high school, and then agree on an end date for work. Sadly, my engineer is not ready to quit, even though he could. Personally, I think kayaking, fishing and hiking is much more interesting than 12 hours a day behind a desk, but YMMV.

IP
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Sadly, my engineer is not ready to quit, even though he could.

Wish we were all so lucky. I'm working on the 'could' part now... but happy that I also very much enjoy what I do :)
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Wish we were all so lucky.

Luck had very little to do with it. We are savers/investors, not spenders. We haven't raised our standard of living since we met over 20 years ago. Raises and bonuses go right into the savings.

"If you watch your pennies, your dollars will take care of themselves." Benjamin Franklin

IP
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We're going back on the market today, and stating that under no circumstances will we follow-up on offers until Monday.

Excellent. Anecdotes, also from the D.C. area:

Last fall I visited a Sunday Open House in my neighborhood that struck me as being under-priced at $890k. Ah, but the decision had been made to review offers Monday at 7 pm. Apparently the intent was to trigger a bidding war. Sure enough, it sold over asking, although not by much:

http://www.zillow.com/homedetails/7301-Radnor-Rd-Bethesda-MD...

The advantage of setting a future date to review "offers" in order to get multiple offers is obviously to be able to select the strongest offer, and by "strongest" that might not be the one with the highest dollar bid. Your Realtor should be able to find out the buyers' situations and assess to some extent the likelihood of their going forward. For example, even if there's no "sell my own house first" contingency, a buyer in an apartment with a large down payment will be in a stronger position than one with a house who would need to get a bridge loan.

Last time I sold a house, the 2 couples bidding were (1) a low-bidding couple in an apartment whose parents liked the house and were providing the down payment, and (2) a full-price couple with a smaller house who claimed they'd be able to sell it for enough to buy our house, but who hadn't even put it on the market yet.

We countered the first couple's bid. Figured that if they got all first-time-buyer panicky, their parents would talk sense to them. Not sure if that in fact is what happened, but despite being unhappy at times they did go to closing.

This "take it off the market and you can back out later" advice is underhanded, but it is also just a small step from the classic strategy of encouraging cold-feet buyers with "Go ahead and make an offer; if something bad turns up during inspection you can back out then," with the understanding that in fact the Realtors will work together to ensure the buyer won't in fact back out.

Good luck!
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inparadise: "JAFO, many states have a mandatory timeframe for back out after receiving HOA docs. It is a state legal requirement in many places, rather than a discretionary clause in the contract."

Thanks, but I knew that was possibility, or I would not have written, "unless the HOA docs. backout is a statutory requirement, once could simple insist that HOA docs. be reviewed first, and there be no HOA backout".

That possibility is exactly why I asked for a copy of "the relevant contract language".

"A good listing agent will have the docs on hand to give to the buyers with contract to minimize that time to back out. It can also cost quite a bit to get those docs, depending on the hoa."

I gagged over the permissible cost in the Virgina statute for electronic copies. What a racket.

Regards, JAFO
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A rec is a terrible thing to waste.

PSU
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Just as a follow-up after the weekend. We had four offers come in tonight. Two had escalation clauses. Talking to our Realtor in the morning, but if I'm reading them correctly, both gave asking price ($435,000) with escalation on one to $440,000 (increments of $1,000) above asking and the other to $20,000 (increments of $500) above asking. Wording is kind of hard to make sense of, but it sounds like the escalation kicks in based on other escalations too, so I'm guessing we're looking at $440,500 from the higher one?

Contingent upon appraisal.

I am shocked to see they were willing to go up to $455,000. In a situation like this do you just go with the $440,500... or do we go back to the other three to ask for their best? What is the correct approach there. I'm sure my Realtor will have advice there in the morning when we talk.

I'm guessing the appraisal might become a problem above $450,000... also $440K is the high end of what we were hoping for. Hoping for a happy ending to all of this stress.

(they all have inspection contingencies... for some reason that makes me feel better, not worse haha - like they are all actually serious about this)
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Congrats!

I'm a little leery of the "contingent upon appraisal." I'd be OK with "contingent upon financing," and then select the potential buyer who has enough cash to make up the difference between what a low appraisal might be, and the higher price he's willing to pay.

Your Realtor will probably advise going with a lower offer, as it's more likely to avoid problems with appraisal. Since the higher offers do have appraisal contingencies, I personally would just go with the offer most in line with comps, which I'm guessing would be one of the lower offers.

Also, a buyer who feels he's getting a bargain is a little less likely to go nuts over trivia that turns up during inspection. A buyer who's paying extra (above the appraisal) is more likely to be a PITA regarding the inspection results.

If the comps support a higher price, go for it! (You should have a pretty good guess, from the comps, what the appraisal will be.)

Good luck!

YG
looking forward to add'l positive updates
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