Hard Knock #1

[Rob C.]

My first attempted deal in REI turned into a bust yesterday as the seller failed to perform. I'm hoping to field some advice from the biggerpockets crowd on how to handle this situation. It's a bit of a long post (sorry for that), so I've highlighted the main points for those who like to skim.

It was as an estate sale, and my offer was accepted at the listing price (a figure just high enough for the seller to pay off the loan balance). At some point the estate (sister of the deceased) stopped making payments on the loan, and in turn the bank evidently ran up large amounts of late fees and penalties to the tune of $6000! Suddenly, the seller was short thousands of dollars she couldn't come up with, and couldn't close at our contractual price without lender forgiveness on the fees. Apparently the estate attorney was pushing down to the wire to get the bank to forgive the fees, but when it came time to close ultimately the bank said no. Consequently the seller refused to sell. Now she is planning to put it back on the market at a price that will cover the bank penalties, or otherwise let it go into foreclosure.

I can't help but feel like I got treated unfairly. Yes, I'll get my earnest money back, but between appraisals, inspections, utilities, travel, etc, I've sunk about $2500 into this. Most everyone I talk to says I have the legal right to demand that money be reimbursed by the seller because she defaulted (i.e. there was no contingency of lender approval in the contract). However, I'm not the type that likes to take matters to court. I feel like reasonable people ought to be able to arrive at reasonable compromises without the judicial system. Moreover, while I want to be upset at the seller, I actually have sympathy for her. After all, her sister just passed away, which is a much more painful situation than I am in obviously. And evidently she was just trying to do the right thing in selling off the property rather than let it go into foreclosure in the first place, but she misstepped along the way and found herself at her wit's end trying to make the transaction work.

Is this problem worth exploring creative solutions, or should I just suck it up, and move on to the next one? If anyone has any advice, I'm all ears.

Thanks, Rob