Doug Buenz
Real Estate Broker
Alain Pinel Realtors
(925) 463-2000
I am a local Real Estate Broker with
Alain Pinel Realtors serving the
Pleasanton and the Tri-Valley
area. I am an avid watcher of the
local real estate market, as well as
cultural and political events.
But that is what I do, not who I am... » read more
Real Estate Q & A
Unreasonable buyers asking for more money from Seller
I entered into a contract to sell my house a couple of weeks ago. Because the market is slow, I ended up taking a lot less for my house than I was planning on. Now the buyers have had inspections, and they want me to credit them $3500 for repairs, most of which are complete B.S. I am really mad about this. Should I tell them to take a hike? Fred W.
Fred, take a deep breath and relax. In some ways this market can be called "Revenge of the Buyers". Remember 4 or 5 years ago when Sellers told buyers things like "take it or leave it" or "don't ask for anything to be fixed... we have 2 other buyers who want it". Now the tables have turned. Don't get hung up on the details of what the buyer wants. Some may be legit, and some might be categorized as outright extortion. But so what. If you want to sell you house, swallow hard and sign it. If you think you can do better in this market, tell them no. It is really that simple. But tread carefully, because working with buyers today is a little like trying to feed a squirrel. They don't really trust you, they are skittish, and at the first sign of trouble they go scampering for the woods. If you refuse the $3500, it could end up costing you $5000, $10,000, or even $20,000 more to get the next buyer in contract.
Stubborn Seller Won't Move Out?
I am buying a house in Pleasanton, and the contract is signed and the escrow is getting ready to close, and the seller decides he does not want to move out at close of escrow, but wants a week after close to move out. When we express the fact that this will not work for us, he threatens to cancel the contract. Can he do this? Ben in Pleasanton
Ben, I have good news and not so good news. The good news is that no, the seller can not unilaterally cancel a ratified contract just because he doesn't get his way. If all contingencies are removed and you are coming down to the wire, the seller can't arbitrarily start changing the terms. And he certainly can not cancel a contract. Real estate contracts are bilateral. they require the agreement of both the buyer and seller. If he attempted to cancel the contract, you could likely tie up his property so he could not sell it to someone else, and take him to court to force him to sell to you under the terms of the contract. That is the good news. The not so good news is that this course of action is time consuming, emotionally draining, and costly. If the seller becomes difficult to deal with, try to relax and work around him if you really want the house. You can always take him to small claims court after the close to recoup any out of pocket expenses you incur. Unfortunately, there is virtually no protection in a contract for an obstinant seller. You can either put up with him as best you can, and then seek renumeration in small claims court, or threaten him back, but it is difficult if not impossible to physically force the seller out of the premises. As always, consult an attorney about the specifics of your case.
Confusion on Commission Agreement?
Doug, my friend listed her house with an agent with the understanding that if one of her friends (named specifically) buys her property, the agent would be compensated at 4% commission. So one of her friends has made an offer. When the agent sent my friend the estimated pay out from the transaction, the agent put in her commission as 6%. Her explanation is that the original deal was only good until she listed the house in MLS. Is this ethical? Or legal? Or standard practice? Ginny C.
Ginny, that is a great question. As is often the case, the devil is in the details. Any agreement involving the sale or transfer or brokerage of real estate in California must be in writing to be enforceable. So if there was no written clause regarding the friend, then your friends are out of luck. So is it legal? I think a better question is the agent legally entitled to the 6%. Based on what you have described, the answer is yes, since there obviously is no written agreement regarding this situation. Is this ethical? I always have a problem with any party that does not honor the spirit of an agreement, even if the details are not specifically spelled out. But keep in mind that neither you nor I heard what was actually said. Again, this is why all agreements dealing with real estate must be in writing. I this standard practice? Again, I am not sure what you are referring to, but if there is an exception or exclusion to the commission agreement for one party, there normally is a time limit during which the party must act. Whether or not that was clearly stated in writing, or clearly explained, is a matter of conjecture at this point. The lesson here is to always get agreements in writing, especially if they are modifications to standard agreements.
As mortgage lenders struggle to adjust to the recent turmoil in the mortgage market, we are hearing rumors of upcoming actions that will hopefully help add stability to the secondary mortgage market (the institutionalized “bond” market where mortgage companies sell packages of loans to investors). One rumor I have heard recently is that the Fed will lower rates again by up to 1/2 % before their next meeting. This has the benefit of lowering the cost of short term financing to banks, thus easing the financial pressure on mortgage lenders until the secondary market reaches equilibrium. It has the additional benefit of sending a strong psychological signal to investors, as well as the general public, that the Federal Reserve will do what is necessary to stabilize the mortgage market. This is certainly a welcome step in combating the volatility we have seen in recent weeks.
The second rumor, if it comes to fruition, will have a much greater impact. Word is that Fannie Mae loan limits may be raised substantially, perhaps into the $600,000’s for the most expensive metro areas (like the Bay Area). Currently set at $417,000, the “conforming” loan limit sets the maximum loan amount for Fannie Mae, which is a quasi-federal agency created to facilitate and standardize mortgage sales in the secondary market. And it works. The secondary market for loans that meet Fannie Mae guidelines is significantly more stable than the secondary market for jumbo loans (loans over the conforming loan limit of $417,000). While the Fannie Mae loan limits work for most of the country, in higher priced markets such as California, New York, and Hawaii, these loan limits are ridiculously low, and comprise a very small percentage of the loans originated in these pricier markets. There has been talk throughout the years of indexing the Fannie Mae loan limits to the median sales price, or creating some other mechanism to make these conforming loan limits more in line with values in higher priced areas. But no action has been taken, largely because the secondary market for jumbo loans was stable and fluid, and there was plenty of money available for jumbo loans at competitive rates, although the rates were slightly higher than conforming loan rates. But not any more. The market for jumbo loans is in turmoil, and we are seeing huge fluctuations in rates, as well as drastic changes in underwriting criteria and loan programs. Raising the Fannie Mae loan limits would have an immediate stabilizing effect on the mortgage market, and help solve the liquidity crisis that has created so many problems recently.
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