PEOBLEMS WITH CLOSING FIRST FLIP (agent issues)

[Huso Akaratovic]

Hello BP family. My name is Huso Akaratovic and I am from Newport News, Virginia. As I am not new to BP, however, this is my first time doing an official introduction in the forum. I have been reading a lot of posts and have learned plenty from all of you and I appreciate it a lot! I have a full time job, and invest on the side. I purchased my first property January-2015 and since then acquired a total of 8 up to date. Prior to making my first purchase, I spent time reading and learning and surrounded myself with likeminded people. I like investing into rentals, flips, and I’m slowly transitioning into small apartment buildings and commercial properties. I currently have my first flip house under contract and have encountered an issue with my agent. I am struck and in need of guidance. Any assistance is much appreciated. There were discrepancies between the listing agent and I. The property we were selling was listed at $84 900. The offer came in at $80 000 with a request to pay for the buyers closing cost up to 3% and no more than $2400. I have agreed to these terms. Once the inspection was completed the seller sent a Property Inspection Contingency Removal Addendum (PICRA). I reviewed the PICRA and have agreed to repair the items on that list, but I counter offered them stating that I will not pay the closing cost. My listing agent prepared an additional addendum and indicated that I was not going to pay the closing cost. She forwarded the PICRA and the separate addendum to the buyer's agent. Several days went by and the buyer's have advised that they will sue me for the breach of contract if I do not comply with paying their closing cost. At this point I was not aware that I was in violation. Once i completed review of the contract, it was determined that my listing agent made a mistake by submitting a separate addendum. Instead she was supposed counter my offer on the PICRA form for it to be valid. I immediately contacted my listing agent and explained to her what I have discovered. I also advised her that the mistake was made on her end and as a result of that I am going to loose $2400. She responded to me saying that "I have been doing this for 30 years and I do not think that I made a mistake. Furthermore, she indicated you have told me to this counter and I've always done it like this. She also indicated to me that she will waive her commission fee, but does not want to speak to me again and do anymore deals". After making that statement she disconnected the line. At this point I was concerned and I did not know what to do since I wanted this deal to go through and make sure the buyers were aware that I was going to honor this contact. I called my listing agent back and asked her what needs to happen next and that I was concerned about this deal. She responded to me stating " I will do the 3 things that i have to do in order for you to close, but I do not want to speak to you again and do anymore deals. I will also waive my commission fee". She then disconnected again leaving me in a situation that I am not sure how to handle.

[Charlie MacPherson]

@Huso Akaratovic  A few things to do:

1. Keep all records of your communications with all parties.  

2. Make especially sure that all communications with your agent from this point forward are in writing, or that you keep contemporaneous notes if there are verbal contacts.  You may need these later if things go sideways.

3. Find out for certain if the buyer is correct that your withdrawal of closing costs had to be submitted on the PICRA or not.  If not, your attorney and the buyer's attorney should work that out.

4. Assuming that the buyer's attorney is right, determine whether you have any financial damages after considering the agent foregoing her commission. If not, you escape with a good deal. If you have, your agent is responsible for making it right with you. You might ask whether she carries E&O insurance.

5. I would ask her to outline the "3 things" that she sees as being necessary for you to close. I'd want to be certain that she's not missing something crucial like attending the final walk-through.

6. I would also ask your attorney to get a confirmation in writing from her that she is foregoing her commission.

This seems like a routine sale.  Unless there's something I"m missing, there's no reason for this kind of thing to happen.

She is, at the very least, unprofessional.  If she were my agent, I'd have a long conversation about what it means to have a fiduciary relationship.