We moved out of our house to facilitate our real estate closing, now the deal has fallen apart.?

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It turns out our RE agent did not have a firm letter of approval from the buyers he had a pre-qualification letter. We took our agent at his word and moved out. It turns out the buyer was pursuing a zero down loan through the USDA and was an extremely shaky buyer. We feel our agent should have checked off, the financing contingency in the buy sell agreement by performing his due diligence and making sure the approval letter was a formal letter and not a pre-qualification letter. We have over 10,000 in moving expenses and now we have to move back into our house. We have also just wasted the prime summer selling season on an unqualified buyer, and we have also lost out on the house we were planning to buy, much less the inconvience of moving out of our house into an interim apartment and now having to move back into our original house. Our realtor is taking no responsibility and is blaming the problem on the buyer’s mortgage lender. Any feedback would be appreciated.

11 Comments
  1. Reply
    sassy25
    January 24, 2011 at 1:31 am

    A deal is never a deal till the closing. Your realtor can only act on information given to her/him. If lied to they have no recourse.

  2. Reply
    Jordan
    January 24, 2011 at 2:15 am

    You, the seller, also have an opportunity to review all documents before signing and accepting them. I wouldn’t trust any zero-down loan or any terms other than cash, conventional, or FHA. Make sure those terms are clearly stated in the listing for your home. Tell your realtor that you will not accept any offers with any other financing terms. If your realtor doesn’t understand this, or the difference between pre-qualified and pre-approved, then it’s time to find another realtor from a different office.

    In the meantime, I would stay in the apartment and not waste any more money moving back into the house. Houses sell much better when vacant anyway. Just make sure the house is immaculate. If there’s any wallpaper, remove it. Paint all walls white or a neutral color.

  3. Reply
    Joanie
    January 24, 2011 at 3:01 am

    Any deal can fall through, and the pre-qual letter is simply based on info the buyer provides to the bank. There is no other type of pre-qual until the buyer actually puts an offer on a house. Otherwise mortgage companies would be wasting their time and money doing full work-ups on people who haven’t even put an offer on a house yet. There are a couple of different names for these pre-qual letters, but nothing is firm until you get actual loan approval. Up ’til that point, the mortgage company is strictly relying on the info from the buyer; nothing is checked or confirmed until after the buyer has made the offer and a contract is entered into. You should never have moved out; it has no bearing on the closing. Sorry to say, but your realtor did nothing wrong, other than convincing you to move out early. I’m not sure why your realtor did this, but it was unnecessary.

  4. Reply
    Mary P
    January 24, 2011 at 3:49 am

    You may have felt that you didn’t need a real estate attorney, but you would have saved money by using one. It wasn’t smart to move out until the mortgage clause was complete, and the buyers had a confirmed mortgage. You could even have continued to show the house during this period, and possibly accepted a backup contract. I agree with you that your agent, and the buyer’s agent should know the difference between a pre-qualification letter, and a pre-approved mortgage commitment, but you shouldn’t have agreed to a zero down mortgage, either.

  5. Reply
    blondewithheart
    January 24, 2011 at 4:13 am

    I find it incredible your agent reccomend you move out…this situation was completely avoidable. Although you have no legal recourse you need to at least change agents. The one you have is either a complete idiot, or totally inexperienced….he should have seen that coming a mile away. Run, run away from him and to a better agent. If you have quams, you could always go to the broker/owner of the company (provided that isn’t the same person as your agent…hopefully not as I can’t believe a broker would do such a thing) and complain your head off- they *might* offer some sort of discount in the comission department, you should even demand your agent not charge you commission.

    My employer has been in the business for 30 years, and if she ever made a blunder like the one above she would not charge a comission as an apology….in fact she has taken off her comission just to get the deal done. You got totally screwed, and it is not you fault.

    A seller should not have to worry about these things, this is what an agent get’s paid for, otherwise what’s the point in obtaining an agent?! On your next transaction you can protect yourself with just a few direct questions to your agent.

    Does this mean the deal is solid and will close?
    What can the buyer do at this point to get free of the contract?
    When can the buyer *not* get out of the contract?

    A house is not sold until it is sold, when the ink is dry in the closing at the title company and when the money has changed hands. Many contracts can and do include a special provision that gives the owners (you) a certain amount of time to move out after the lcosing has taken place. So if you wish to move back in, I recomend you ask your agent for that. You may have to pay rent to the new owner, or offer a discount for the extra time, but it’s worth it.

    FYI: A vacant house does NOT sell better unless the previous decor was bad. If the furniture and decor is decent-nice, the home is much better viewed….its why many sellers pay people to “stage” an empty house!

  6. Reply
    Ken M
    January 24, 2011 at 4:32 am

    I can’t imagine your realtor telling you to move out of your home until all the conditions were removed from your purchace agreement. Also, where was your laywer in all this? If the mortgage was a conditon to purchase it should have been written on the putchase agreement then waived when the buyer had final approval for the mortgage. Until this happened you only had a conditional sale on your hme.

    If there was no condition on your purchase agreement then you may have some recorse on the buyer. Also a good realtor should have pointed out ,even though you have no conditions on your agreement, that the mortgage was not confirmed and showen you the pre-approval letter so you could make an informed decission. If this is the case you may what to discuss this with the real estate authority in your area.

  7. Reply
    real estate guy
    January 24, 2011 at 5:04 am

    as you have found out, a prequal letter is worthless. Yes, the lender should have provided a full loan commitment that was submitted to underwriting and with any conditions.

    Many lenders will say that they can’t give you that type of commitment until after the appraisal, etc has been done. WRONG. These are just conditions of the loan.

    You received notice the buyer was qualified and I’m sure that the agent is saying that he gave you every thing he could. But as an agent, they SHOULD know that the prequal is NOT a loan approval. You are right, he had due diligence to make sure the letter was more then a prequal.

    We require that EVERY buyer has a full loan approval from underwriting before we start construction. It’s the way it should be.

    The issue is, can you get any money from them. You would need to sue the lender and the agent, but this will be a long process and the odds of winning are small.

  8. Reply
    loanmasterone
    January 24, 2011 at 5:18 am

    Apparently your real estate agent was not as competent as you thought. This agent like other agents never take responsibility for anything done. They will always point out the small print once something go wrong.

    You should never “NEVER” move out of your house until the mortgage loan of the buyer has closed and they have signed loan docs. You real estate sales contract should state that you will move 5-10 days after closing. This will give you a chance to move. You might be required to pay rent for staying in someone else place but this can be worked out in escrow and paid through escrow.

    You should involve yourself more in the process of the sale in the future. Remember that the real estate agent work for you as well as all other professionals in the sale process such as the title officer, the escrow officer, the mortgage lender of the buyer, to include the buyers agent to some extent.

    You should communicate with these individuals at least once a week to find out the status of your real estate transaction. The buyers side will not tell you too much other than the transaction is still going and on track to close on a certain date.

    Your real estate agent told you they would take care of everything, you saw how that worked out with your recent transaction.

    Not all real estate agents are this incompetent. Your job is to interview each real estate agent you plan to hire, find out their experience, get references of individuals that have used their services. You should interview about 3 agents. They should work in your immediate area that you are selling your property in. Not across town, not the next town, but in you neighborhood.

    I hope this has been of some benefit to you, good luck.

    “FIGHT ON”

    Of course your

  9. Reply
    David Z
    January 24, 2011 at 5:39 am

    I am sorry for your mess. That is a real shame. Closings fail all the time so moving ahead of time was a real leap of faith.

    Your realtor is partially at fault. he could have better educated you on the risk of the closing not occuring but most sellers understand this. you counted your chickens before they were hatched. your realtor lost a paycheck so they are upset also.

    no one is ever pre approved meaning the lender has made a full and binding commitment to make the loan. no lender ever does this in residential real estate. Every closing is at risk of falling apart the morning of the closing.

    most sellers ask to occupy home for up to 30 days after closing by renting from buyer to avoid these problems. it sucks to move when closing fails.

  10. Reply
    Alterfemego
    January 24, 2011 at 5:54 am

    I’m so sorry. I know that doesn’t mean much, but I am sorry you’ve had to deal with this situation.

    Because none of us were party to any conversations, I’d blame all of you involved in the transaction. Each made a decision to either not fully explain or take the time to understand the implications of accepting the offer written the way you describe. Keep in mind the buyers agent can only advocate for his client, as your realtor should have advocated for you.

    If it were my transaction as your realtor, I would accept blame, because it would be my fault for not making sure you understood the contract.

    You have some choices to make now, and you need to consider them carefully.

  11. Reply
    Othniel
    January 24, 2011 at 5:56 am

    Too bad you didn’t get good advice from your agent. He or she must be very new to real estate since a pre-qualification letter means nothing!

    You probably should stay put and find an experienced agent to handle the sale of your home. Call the Broker of the company where you got the bad advice and tell him or her that you want to cancel the listing without penalty and why.

    I think you have to share responsibility for the misunderstanding but you also lack experience and need someone who really knows the ropes to help you.

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