Don't trust our agent, what can we do?

[Erica Nagle]

First of all I want to say that we do have some fault in this situation. I'm not trying to play the innocent victim, we did some things wrong and have learned our lesson. But we aren't the only ones that did something wrong but at least we are new to the business and these people are not. All of that being said we have the following situation. 

We purchased a house from another investor off of the MLS that they bought for $200 and turned around and resisted (on the MLS what?) for $250 (hundred thousand). We ran our numbers and the ARV was around $425 with $75 in repairs. So we ended up being the place against our gut instinct for $243. The numbers appear good but the kicker is that the quotes were coming in around $125 due to the code issues that would need to be addressed. The issues could have been left but that would mean not doing the renovations needed to get the ARV.

In Massachusetts we have something called a P&S agreement. In a normal retail transaction this is usually after the inspection period is over and everything is good. At the time of signing you also put down 5% of the purchase price. In our case the contract was written like a retail transaction except we had waived the inspection and their was no wording about due diligence (I found out now...lesson #1, read the contract in depth). We signed the P&S a week after the offer was signed (about a week and a half ago) and put down the rest of the 5%. This was $13,500 total.

Now that we have all of the information we stand to make about $18,000 in total on the deal (and that's if the repairs stay around $75 which is not likely. The out of pocket costs for this are around $60 grand. Yes we will make $80 but subtract the holding/hard money costs and you have not much. Of course contractors are slow and we didn't know this until a couple of days ago. 

We are scheduled to close this Thursday and we told our realtor to ask for an extension because our hard money people wanted a signed contractor quote for $75k. He never asked for the extension and he's trying to tell us how to do it by just adding granite in the kitchen and skim coating the walls. I did a cost analysis and wrote a letter saying we needed to lower the price to $203 to make it profitable or we needed out of the deal. We sent the note to our realtor to deliver on Saturday and haven't heard anything from the sellers until today (4:45 PM EST) saying they won't give us our money back. 

Like I said we did some things wrong, the initial contract was bad and we should have never signed it. It didn't protect us and we should have never agreed to pay $13,500 in total deposits. We weren't in a position to know the true costs and we should have never signed the P&S. But our realtor misrepresented the ARV and didn't protect us in the contract. He also never asked for an extension like we asked him to do. I've caught him in lies about when he delivered my note to the sellers and our attorney. The attorney is his 'guy' so I don't trust the attorney either. I realize we likely won't get all of our deposit back but at this point I don't feel like we have anyone on our side.

Add to all of this that the listing was incorrect. The place was listed at 4 bedrooms, 1 bath and it's actually 2 bedrooms, 0 baths. It has a toilet room and a shower in the middle of another room. I was just sent a letter from the listing agent saying they won't let us out of the contract and are going to keep our money. The lawyer is going to talk to their lawyer but I don't have any faith in him.