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Buyers Who Want to Get Out of a Home Purchase Contract
The time to think about how to get out of a home purchase contract is at signing.
While I am not an advocate for trying to get out of a home purchase contract, I sure seem to attract a lot of buyers who are working with some other agent and want to cancel their transaction. The conversations usually begin innocently enough, and they don’t always tell me they are in the middle of a sale transaction right off the bat. I generally have to ask pointed questions to extract that information.
They aren’t trying to take advantage of my knowledge when they call, either. Most of these buyers are very upfront about wanting to hire me. The only problem is they are a day late and a dollar short, as the saying goes. They should have hired me from the beginning but for whatever reason, did not. So it’s often on the tail end of transactions that they think about calling me for help, especially when they want to get out of a home purchase contract.
The problem with this scenario is I can’t really advise them. For the obvious reason being that I am not their Sacramento Realtor. They already have a Realtor working for them, and it is against the Code of Ethics for any other Realtor to interfere in an existing transaction. When I explain this, the argument is often: Oh, but I’m not asking you to interfere. I’m just asking . . . which amounts to interfering.
The unhappy buyers probably hope they are sweetening the discussion by promising to work with me. That’s like promising to marry a person when you’re still married to somebody else. Ain’t gonna happen until you get divorced. And a buyer, once in contract, cannot divorce her agent to marry another. She can ask the agent’s broker to assign a different agent from the brokerage to her file, but she’s gotta dance with the brokerage who brung her to the party.
Further, after all of the buyer contingencies are removed, if you want to get out of the purchase contract, you’ll have to give up your earnest money deposit. Not to mention, the seller might demand liquidated damages. Messy, icky situation. On top of which, Realtors are not lawyers and cannot provide legal advice.
I try to show empathy for those stuck in these types of situations. I understand how frustrating it can be to feel like you do not want to buy the house you have committed to purchase in addition to wanting to fire your agent. It’s like a double whammy. There is a place and time to fire an agent, not when you’re ready to close escrow, though.
Funny thing, though. A woman I spoke to about this very situation last year called me recently and now wants to sell that house. She was astonished I recalled our conversation, since I talk to so many people. I don’t recall much of her conversation, honestly, but I do recall her pain, her agony. That won’t happen this time around.
What Selling Real Estate in the 1970s Was Like
Selling real estate in the 1970s bears little resemblance to today.
Selling real estate in the 1970s was as different as Red vs Blue states today. Many years ago, on a faraway planet known as Orange County, California, I once primarily represented investors and created the craziest home buying concepts that were almost always accepted without question. Looking back, I possess fond memories of this time, when many agents were considered pioneers, innovators, although, in some cases, crooks; and because of the latter, I’m glad the 1970s are history.
A real estate agent could do just about anything she could conceive in real estate. For me, personally, I’m capable of conceiving a lot. I suffer from imagination overload. There were few laws in the 1970s, except for usury and Fair Housing, which governed agent activity.
I’ll share some of these unusual 1970s concepts and practices with you, in hopes that you will realize how far we have come today in real estate, and not that you want to do any of this yourself. The first thing was my buyers never signed a purchase contract. Buyers were not involved. They signed an assignment of contract from me. I wrote all of the purchase contracts in my name or assignee. I decided the best way to purchase the property and when the offer was accepted by the seller, I presented it for consideration to the investor.
We didn’t have a fax machine. Copiers, the size of small cars, utilized huge drums. We dialed black rotary phones and called sellers from the newspaper. MLS consisted of a large book published once a month, with small weekly updates.
Just about all of the financing was creative, mostly subject to, with a few lease option sales, land contracts and wrap-arounds. I sold second trust deeds after creating the paper from thin air, pocketing a 20% to 30% discount and using the instruments as down payments on property I didn’t always assign away. Some of the homes I kept for myself. We also picked up loan proceeds by writing it into the contract, until lenders included verbiage to stop it.
When selling real estate in the 1970s, in the purchase contract, the buyer obtained a loan of $100,000, delivered $96,000 to the seller, and the difference, if any, of loan proceeds above $90,000 was paid to the buyer’s brokerage. This was on top of the real estate commission. All parties would agree to this. Blows my mind. Against the law today.
Today, an assignment of contract is unusual, and if I spot a buyer trying to wholesale a property like that, I’ll advise the seller not to take the offer. It’s generally not in the seller’s best interest. Besides, double escrowing or picking up a property through an assignment is rare in a seller’s market, but it doesn’t stop seminar gurus from teaching this old / new practice to the young impressionables and special little snowflakes.
I never inspected properties when selling real estate in the 1970s. This was before The Easton vs. Strassburger 1984 decision that held agents and real estate brokers have a duty to conduct a reasonable inspection. My transactions were fast and furious, we typically closed in a week. Cash flow ruled, but if you couldn’t get cash flow, negative cash flow was OK with 7% down and straight notes for equity. My entire practice was based on my ability to negotiate and to negotiate well.
The 1986 Tax Reform Act put a halt to a lot of investing (no more tax write-offs for negative income), and the 1991 downturn in the market pushed a lot of investors out of the marketplace. Years go by. Things change. Markets evolve.
Every so often I receive an offer like one of those from 40 years ago, and of course I send it to the seller. But I also explain in detail what it is. In fact, we received one of those types of offers a few days ago, trying to lowball 80 cents on the dollar in a seller’s market and wholesale it out, OOffda. I think this means seminar groups are in town.
I’m probably one of the very few Sacramento Realtors who survived selling real estate in the 1970s and the creative financing fiasco that time period entailed. Let’s just say we’re much better off today. If you’re looking for a top producer in Sacramento to sell your home, call Elizabeth Weintraub at 916.233.6759.
Why Sacramento Seller Inspections Are Unnecessary Today
Very little reason for Sacramento home sellers to provide seller inspections.
There are plenty of old school agents wandering about Sacramento whose practice is to always order home seller inspections upon listing a home. That’s not my practice. I find it completely unnecessary. I am an old-school agent myself, having started in this business in the 1970s. But I really see little reason for the seller to provide seller inspections to the buyer. Let buyers do their own due diligence.
I’ve had buyer’s agents yell at me, very angry that we did not provide them with a pest report. Why should the seller give seller disclosures that are not required to the buyer? Sellers are required to disclose what they know. They are not required to dig up more defects and present them for consideration, like, here, Mr. Buyer, take a look at all of this crap that’s wrong with my house. I’m doing full disclosure.
I would say, no, you’re stabbing yourself in the eye with a sharp object. You’re handing over opinions of defects, which you’re not required to do and paying for that mistake in more ways than one. In case a seller believes these reports do not need to be given to the buyer, think again. There are no reports for seller edification only. Once sellers receive a report, it becomes a document of knowledge you must deliver to the buyer.
Some agents tell their sellers to obtain a home inspection, too. They do this under the guise of then the seller will know what is wrong and can fix or disclose it. On the surface, this sounds almost reasonable until you dig below. For starters, the alleged defect might not be a defect and the home inspector could be wrong. Second, the buyer will still obtain a home inspection and that report could contain even MORE defects. Some of the defects that are noted on your report might not even appear on the buyer’s. Talk about a can o’ worms.
Other agents claim that a bad pest inspection can happen if you leave it up to the buyer to order it, meaning buyers can hire an inept company, and then the seller is stuck with that report. If the seller objects, the seller can then hire a different pest company and argue the results. Also, most buyer’s agents want to hire the best pest company, not the worst.
Home buyers are all over the board about things they would like fixed from inspections. It’s pretty much useless to try to pinpoint everything a buyer would like repaired or updated. Sellers certainly should not go out of their way to find things wrong with their house by obtaining seller inspections. That’s the buyer’s job.
I suppose the rationale of agents who like to order seller inspections on behalf of their sellers is the agents are unlikely to be held responsible for condition. Agents are only responsible to disclose what they see and what they know. Obtaining seller inspections seems overkill risk management to me, and exposes my sellers to a potential loss of profit.
If you’re looking for a strong listing agent who will work solely on your behalf, then call Sacramento Realtor Elizabeth Weintraub, a top Lyon broker-associate, at 916.233.6759. Weintraub will try to protect you from these disasters.
Do Not Care So Much About What Other People Think
Elizabeth Weintraub does not really care what other people think.
You can never be freely yourself if you care too much about what other people think. Oh, sure, easy for you to say, is the standard response I get when I give people solid advice who want to pluck excuses out of their butt as supposedly logical reasons why they can’t take my advice. You can do it but I can’t because blah, blah, blah. You’re this and I’m that. And they are right. They can’t do it, because they refuse.
There is fear. They feel a need to conform. There is comfort in conformity. And they care too much about what other people think. For starters, people don’t think all that much about others anyway because people are way too busy thinking about themselves. And people all harbor different opinions, ideas. They will interpret your actions in ways you haven’t begun to imagine.
A wise person many years ago told me it’s none of my business what other people think. I’ve always tried to hold true to that statement. It is none of my business what you think of me. You are free to form your own judgments. I thought of all this when I asked by a writer for Crain’s Sacramento to share a mistake and the lesson learned. At that particular moment, under a cabana, lounging on an Hawaiian beach, I could think of nothing better to talk about than this subject:
Do not care so much about what other people think.
Real estate agents, especially, are guilty, guilty as sin. Ask any if they would be willing to put themselves out there, maybe by taking a stand on a controversy, and they fret over the possibility of alienation on the horizon. Many in sales will exchange integrity for business in a heartbeat. They don’t want to offend. So they don’t divulge anything they feel could cause a potential client to hire another agent, and it doesn’t bother them to slip into a vanilla coma.
I find myself often talking to the wall when I advise agents to be themselves. Oh sure, easy for you to say. If you are yourself, you will attract other people just like you. You probably won’t attract the people who will disagree, fight, annoy, be mean or otherwise try to cut your throat. (Unless you’re that sort of person.) Just be who you are. Your own unique self, and you’ll find plenty of birds of a feather.
Don’t care so much about what other people think, and people will gravitate toward you. You can read more about that in an interview I gave while lying on a beach last week in Hawaii to Crain’s Sacramento, If I Knew Then.
Pay Your 2016 Fourth Quarter Estimated Taxes Today
We get an extension this January to file our 2016 fourth quarter estimated taxes.
One of the real reasons I came back from Hawaii to Sacramento last week was to be here in time to pay my 4th quarter estimated taxes for 2016. I do not like using a public WiFi to access sensitive personal data like this from a hotel in Maui, even using a VPN. I figure why take the risk? Hackers are everywhere, but especially prone to places where people are relaxed, on vacation, having fun. Although, honestly, I sorta doubt most people would be trying to pay their taxes online while they are on vacation, but you never know.
Yeah, it might just dawn on them, oops, I need to contact the IRS and the California Franchise Tax Board. There are those last-minute people who forget about these things. Which is why I am reminding everyone that us self-employed people, why, we get extra time this year to pay our 2016 fourth quarter estimated taxes. We had the 15th of January fall on a Sunday, and the 16th is a holiday, so we get an extension to January 17th.
One thing I noticed is I under-estimated my income this year. I don’t want to pay a penalty or interest. One easy way to get around that when you’re at my income level is to figure 10% of your state income tax on the overage and pay it online. You can figure 30% on the overage on your federal tax. But I am not an accountant, and my way of figuring things might be different for your tax bracket, so ask your accountant for advice.
It’s a way to catch up if you’ve under-estimated. Figuring out estimated taxes is difficult when you’re a Sacramento Realtor whose income fluctuates from year to year. I thought 2016 would be rougher than it was, since January of 2016 started out so slowly. But it actually went wild from Spring to Fall. Then, instead of picking up steam around Labor Day, the election threw everything into a tizzy until December, when the market finally exploded again.
I guess there are more things to complain about than having to pay more for 2016 fourth quarter estimated taxes. I’d probably be more upset if I overpaid, but that’s never happened yet. Darn!
Click here to pay your California 2016 fourth quarter estimated taxes to the Franchise Tax Board.
Click here to pay your Federal 2016 fourth quarter estimated taxes to the United States Treasury.
