Agent Misleads Seller- Tries to Dishonor Contract on Closing Day

[Blake Dailey]

Below is the backgroud of what happened with the agent trying to change the terms after the purchase agreement was signed by both parties, and the question of what to do about it.

I have a signed contract to purchase a 2-unit, which will become a STR once it is rehabbed and furnished. I found this on Zillow advertised as "seller financing witt low terms" and had sat on the market for 6 months due to it not being a standard SFR and not being a standard Duplex - so I can get the best use of the property as an STR. Originally, I was told by the agent that the seller just needed enough down to cover the remaining 15k on the mortgage, and wanted closing costs paid for, and $700/mon. So I offered to do a lease option, pay the remaining mortgage until its paid off, and pay the seller. I still would cash flow well with being essentially zero down on the purchase. In the midst of this the seller received insurance money and paid the remaining loan balance so the agent told me because of that the seller wanted to seller finance to complete the sale now, and that cash down was not as important as the monthly payments and just getting the house sold (Afterall is sat for 6 months). So I offered her asking price with 100% financed at the payments she wanted, with a five year balloon. The same net result for the seller but my cashflow would increase because of only one payment - to the seller. The agent said the seller said that would be fine.

After another week of whatever the agent was doing she came back and asked for 20k down. I said that changes the deal considerably and would probably just move on. She said okay fine, that the seller just needed it sold. She immediately sent me the contract, written up as 115k purchase price, loan amount 115k, 30yr am, 5 yr balloon, at 5% interest, and normal buyer and sellers closing costs. We both signed.

Today is the day of closing, I get sent a copy of the HUD from the title company stating I am paying 15k down. I correct the title company and send them a copy of the contract. I also let the agent know, assuming she might have told the title company I was paying money down for some reason. She did tell the title company that and tells me she thought I was putting 15k down. I told her - from the beginning its been zero down due to the money I have to put into repairs, and that I could satisfy all the sellers other requests, to which we have a signed contract.

 My worry is that the agent misled the seller to believe she was getting 15k down, while telling me it was zero down. Maybe just to trying to get it sold and earn her commission? She seemed like nice enough however - so my guess is just incompetence. Now we have a signed contract, are supposed to close, and a new found disagreement after all of our negotiations AND signed contract by both parties. I offered to pay all the closing costs, even though she wrote the contract for the seller to pay normal seller's costs.

What am I to do? 

[John Barrows]

Sounds like the agent never disclosed and sounds to me like the escrow company never got a copy of the original agreement.

Two separate issues here.

1. Why did you wait so long to give a copy of your agreement to the escrow company? The Title company has nothing to do with escrow. Plus, the agent doesn't EVER represent you in any manner. The agent represents the seller.

2. When the agent came to you about the change, that should have been your clue that something was wrong and you should have reacted for your own recourse. Now, with the new VERBAL agreements being thrown around, that should have been RED FLAG # 2. You should have received a new agreement signed off by both parties. Doesn't sound like you did.

3. Most all states have a (BUYER BEWARE) law. This law openly states, that all buyers acting for themselves or even being represented, MUST BEWARE OF BAD and ILLEGAL PRACTICES. Washington State is a BUYER BEWARE STATE! 

If you haven't closed yet, my suspicions suggest the agent wants their commission and never thought this through. The final step for the agent was to tell the seller she owed a commission (OUT OF SELLER POCKET) and the seller said BS, get the money from the buyer... This sounds more plausible.