Categories: Hoboken Condos
For Sale By Owner Who Blew It
Here is a great one. A seller paid a small, flat-fee to a brokerage service that will do nothing more than list your unit on the MLS. You don’t get any advice, you don’t get an agent to do showings, you don’t get someone to negotiate for you. Nothing – just a listing.
The seller meets the buyers when they come to see the property with their agent. (There’s no seller’s agent so the seller needs to be home to let buyers into the property). Buyers like the place and make a full price offer in writing. Seller verbally accepts but refuses to sign written offer. “Our attorney wants a contract”. Buyer’s agent submits a full contract. Seller won’t sign it. “Our attorney has to review it before we sign”. Wrong! In New Jersey, the attorney review takes places after the parties have signed the draft contract prepared by the buyer’s agent. That is the whole point of attorney review. But wait, it gets better.
Buyer offers seller an additional amount over asking in exchange for canceling future showings. Seller says, “our attorney told us we can keep showing the unit during attorney review”. Duh. Seller could keep showing it – seller could do whatever he wants. Did your attorney not explain the basic law of contracts? Buyer offered consideration (extra money) in exchange for seller not showing the property. Seller can accept that offer and, for the extra money, stop showings. This seller wanted to keep the money and keep showing. But wait, it gets even better!
Parties finally sign the contracts and agree to stop showings. Attorney review begins. During attorney review, there is no binding contract and either party can walk away at any time without even having a reason, and no money is exchanged. Once out of attorney review, the contract is no longer a draft and becomes a binding contract. Typically, at that time, buyer will pay an initial 10% of the purchase price into escrow. Buyers had only seen the unit once and immediately made their offer. Now they want to revisit the property. Seller says “our attorney told us you can’t come back until we are out of attorney review.”
Now, I happen to be an attorney. I know that attorneys tend to specialize in particular areas of the law. Maybe this one was not a real estate lawyer. I know he was not a local lawyer (always a problem). He had no clue as to how real estate transactions typically take place in Hoboken. Maybe he or she was just a bad lawyer giving really bad advice. Had the sellers had an agent, they would have likely received better guidance from someone more familiar with how we practice real estate in Hoboken.
Why did the buyers want to revisit the property? It makes absolutely no difference. Most buyers spend only a few minutes looking. It is common for buyers to go back for a second and even third showing. They may want to show it to their family, take measurements, take photos, think about where to put their furniture or simply take another, closer look. These sellers must have been too afraid that buyers might change their mind and thought the best way to avoid that was by locking them out. Guess what happened instead?