Q: My home has been in escrow for going on three months now. Escrow was supposed to close in 45 days and it’s still not closed. It turns out the buyer was never really qualified for the loan in the first place. Our Realtor kept telling us the lender was having some trouble but said he would be able to write the loan so we kept extending the contract. We are trying to buy a new home in a new development and I just got a call from the builder. We need to sell this home in order the buy the new one but the lady who called said they wouldn’t be able to hold the house we want for very much longer. They’ve already waited almost three weeks. If we lose the house we want I’m going to hold our Realtor responsible. He had told us that 45 days should be plenty of time to complete the sale and then kept telling us the lender was going to come through. He should have gotten this house closed on time but he didn’t. My question is: If our Realtor is liable what does he have to do? Does he have to pay us money for our trouble? How much?
A: Regular readers of this column will understand why a good Realtor is invaluable for many reasons.
However, one thing Realtor’s are notoriously bad at is telling their clients exactly what it is they can do for them and what things they have no control over.
Whether or not the delay in closing is in any way your Realtor’s fault depends upon the facts. Let’s look at what your Realtor, that is the Realtor representing the seller, should do.
When the offer to purchase your home came in your Realtor should have reviewed it with you explaining in detail each section of the proposed contract and how it would affect you. At that point you will decide to accept, reject, or make a counteroffer to the contract.
As part of the initial evaluation process your Realtor probably received a prequalification letter from the buyer’s lender. The content of these letters vary but usually say the lender has done some preliminary checking, usually based on the information provided by the buyer, and that the buyer is able to qualify for the needed loan. This is always subject to the buyer, and/or the house, going through a more detailed qualification process.
Sometimes these letters aren’t provided with the offer but the contract usually calls for them to be given within five days of acceptance of the offer.
Frankly, these letters often are barely worth the paper they’re printed on.
While some lenders have prequalification programs that all but assure the buyer they will get the loan, a vast majority of these letters are handed out without much more than the slightest evaluation on the part of the lender. In the past I’ve known of lenders who hand out the letters with the amount of money left blank for the buyer to fill in.
I assume your Realtor received a prequalification letter. At the time the offer is made that’s about the best he can do to assure you the buyer is qualified.
Once the escrow is in progress it is normal for the seller’s agent to keep in contact with the buyer’s lender to see how the process is coming along.
You indicated that your Realtor kept telling you the lender was having some trouble. If your Realtor was getting his information from the loan officer or the other Realtor there wasn’t much more he could do other than keep you informed.
The fact that you had a 45-day escrow requirement in the contract doesn’t mean your Realtor, or any Realtor, can single-handedly meet the deadline. It takes the cooperation of the Realtors, the buyer and seller, the lender, and often repair people and inspectors to close an escrow.
Now, having said that, if your Realtor wasn’t talking to the other Realtor or lender and wasn’t really getting any information so you could make a decision regarding sticking with this buyer, or not, then your agent has a legal problem. In that event he and his broker could be liable to you for any monetary damages you suffered. But your Realtor is as motivated to close the sale as you are.
Remember, your Realtor doesn’t make a penny until, or unless, escrow closes. If the Realtor believes a buyer isn’t going to be able to complete the purchase, they have every reason to advise you to put the home back on the market ASAP.
So keep in mind your Realtor has few silver bullets letting him act as the Lone Ranger. It takes a surprising number of people, and sometimes a little luck, to close escrows.
Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you would like to have answered in this column you can contact him at [email protected]