For Sale by owner woes

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Dear Phyllis,

My nephew passed away, and I am the executor of his estate. He had a dear friend who helped him convalesce. After he passed, this friend wanted to buy his home. As there were no Realtor commissions involved, I wanted to help him. Therefore, I agreed to sell him the home at a discounted price. We have been back and forth for thirteen months with different lenders, and he still can’t get a loan. Even worse, he now wants to renegotiate the price because the 2nd appraisal was low.

For sale by owner woes

Dear For sale by owner woes,

Most real estate agents insist on verifying the buyer’s ability to obtain financing before accepting an offer. It typically takes just 2-4 weeks to get loan approval.

In my experience, a notice to perform should be sent to the buyer, advising him to remove his loan contingency (putting his deposit at risk) within 24 hours. But that tactic isn’t going to get the buyer’s loan approved, which is what you need to close this escrow.

The low appraisal is another matter. What was the value of the first appraisal, and how long ago was that done? Many Realtors know how to review an appraisal to ensure that the information regarding the comparables (similar sold listings) used were correct. What is the condition of your property? If your home is updated, did the appraiser credit your home with the proper adjustments?

You are likely in escrow with a buyer who cannot or will not close. You might ask the buyer to meet with both him and his lender. Perhaps the lender can explain the delay in obtaining loan approval. Maybe you and the lender could review the appraisal for errors.

If the buyer can’t or won’t move towards closing, attempt to have the buyer agree to cancel escrow in writing. If the buyer disagrees, you should contact a real estate attorney.

Related Post: What happens if I find my own buyer?