Moral dilemma on home sale agreement

weedyacresJune 18, 2014

A friend came to me with a moral dilemma. I'm interested in your opinions on WWYD.

They are moving across the country at the end of July. About a month ago, their neighbor approached them wanting to buy their house. They verbally agreed on a price about 10%/$25K below what friends believe the market value to be. They were a bit reluctant on the price, but see value in not having to ready the home for sale, go through showings, screen realtors, pay realtors, and all that hassle.

Nothing has been signed. The neighbors are supposed to put their offer in writing and then they can get their lawyers to check everything and proceed.

In the meantime, the neighbors found someone who wants to buy their house, and their buyers put their home on the market, quickly sold it, and are living in temporary quarters until the dominoes move.

Friend has had seller's remorse ever since the verbal agreement, and feels a bit mad/taken advantage of by the neighbor. Doesn't know if he's just cheap or can't afford/qualify for more.

Yesterday a realtor knocked on their door. She has a relocation client that's looking for something the size/price of their house in that particular school district. Thinks they could get $30K more than the neighbor's price, minus $10K commission to the realtor. If friends are willing to entertain selling to these clients, she'll have them fly out this weekend to look at the home.

Would you back out of the deal with the neighbor? I understand there's no legal obligation to proceed, as there's nothing in writing. This is a moral question.

I appreciate your thoughts.

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pixie_lou

How long ago was the verbal agreement? It sounds like it was a whole ago, which makes me think the potential buyer isn't serious.

Give the neighbor 24 or 48 hours to put the deal together in writing.

    Bookmark   June 18, 2014 at 7:37PM
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sushipup1

How well do they know these neighbors? That's a deal good enough only for family, IMHO. If the neighbor isn't a close friend, give them a chance to match the realtor's price.

But that's WAY too much money to leave on the table. There is "moral" and there is "stupid."

    Bookmark   June 18, 2014 at 7:39PM
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jewelisfabulous

I'd say the neighbor wanting to buy the property had a moral obligation to put their offer into writing well before a month had passed. It's not right or fair that they've strung your friend along for so long without putting pen to paper. And, as the adage goes, "if it's not written, it's not real".

So, in my opinion, your friend shouldn't feel any guilt about proceeding to make a deal with any other buyer. If she wants to, she can give her neighbor a "heads up" if other interested parties have come forward and that if they make a good offer, she's going to accept it. She should state that they, of course, have the option of upping their verbal offer but that it would need to be in writing.

If they give her any grief, she can simply state that they had every opportunity to buy the house at discount but that she can't turn away a legitimate buyer and put their family's finances at risk for month-old offer that still has no paper to back it up.

If they get mad, so be it. She can simply point out that they ought to be mad at themselves as she would have signed their deal if they had promptly gotten her a contract to sign.

This post was edited by Jewel654 on Thu, Jun 19, 14 at 10:24

    Bookmark   June 18, 2014 at 7:44PM
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Acadiafun

Isn't it odd that a real estate agent knocks on someone's door to see if they want to sell their house? And then tells them she has a buyer willing to pay more than the offer they have without their client even seeing the house? There is so much that could be wrong right there. It seems the seller is not using research to determine the market value of their house. Who knows if they can get $30k more than the offer they received. They could get much more or much less. And it does seem like time is an issue for them. It is never good to leave a house vacant for sale while you are across the country.

As for the moral dilemma- the verbal agreement was that a written offer would follow and the implied expectation was it would follow in a timely manner. It did not. So morally I believe the seller is off the hook.

    Bookmark   June 18, 2014 at 8:49PM
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ncrealestateguy

Tell the agent to have the buyers look at the home ASAP. If they like it, have them write up an offer. Take this offer to the neighbors and ask them to present their highest and best, in writing, w/in 24 - 48 hours.
Done.

    Bookmark   June 18, 2014 at 10:47PM
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serge94501

There are no verbal offers in Real Estate for good reason. If and when the neighbor puts up a written offer, the seller can decide whether to accept or counter. As for selling it under market - why? Would your friend sell the house for full price to someone else and then hand over $25K to the neighbor?

    Bookmark   June 18, 2014 at 10:51PM
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gyr_falcon

--> Friend has had seller's remorse ever since the verbal agreement, and feels a bit mad/taken advantage of by the neighbor.But the question was what I would do. That would be to offer the neighbor the opportunity to promptly follow through with the agreed sale. For not acting on my reservations in a timely manner, it became my own decision to toss the potential higher selling price. If the neighbors are not prepared to seal the deal immediately, then I would be free to accept other offers.

I have already been tested on loss vs. deal agreement that could have cost me that much, or more, financially. The decision reversal was made by me overnight, (rather than a month later per the original post tale). I was released from the agreement, thankfully. But if that hadn't happened, I would have kept my word despite the loss.

    Bookmark   June 19, 2014 at 2:49AM
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lazy_gardens

It's been a MONTH.

I'd tell the neighbors they have 24 hours to make a formal, written, signed offer or it's going on the open market and they can stand in line to bid.

    Bookmark   June 19, 2014 at 8:34AM
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patriceny

I was in a similar situation - had someone approach me about buying my home before it hit the market. We agreed on a price I thought was a smidge low, but the no stress factor was huge for me. I hadn't considered going FSBO because I'd never sold a house before. But I have a lawyer I trust with my life, who has always handled my real estate stuff, and after talking with her I decided to go forward.

We were still in the verbal phase - I was waiting for paperwork from the buyer - when someone else approached me with a higher offer.

It was a tough decision. Both were serious buyers, and my head desperately wanted to let them have a mini-bidding war. But ethically, for me, I felt I needed to let the original buyer have an opportunity to close the deal at the agreed-upon price.

So I told her about the situation and gave her a deadline. She met it and bought the house.

It irks me that I lost a higher sale....but for me, it was the right decision.

    Bookmark   June 19, 2014 at 10:06AM
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rob333

I like ncrealestate's suggestion best of getting a written offer to show the neighbor. I do think I'd give them a chance, but show that there's value in what the friend is doing. It also puts the other party on the line if the neighbor also has a change of heart. Remember, contracts go both ways, and protect both parties. It could bite the friend in the rear, just as much as the neighbor, not to have a contract in writing.

    Bookmark   June 19, 2014 at 10:30AM
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nosoccermom

What are the neighbors waiting for if they supposedly already sold their house?

Right now, it sounds like your friends have a bunch of potential buyers but no offer. I'd say to get things moving, following ncrealestate's suggestion. Get offers and let potential buyers know what's going on. They can decide to make an offer. Also, it's not only the highest price that needs to be considered.

    Bookmark   June 19, 2014 at 12:19PM
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fishymom

"Isn't it odd that a real estate agent knocks on someone's door to see if they want to sell their house?"

I don't find it odd at all, especially in a hot market. We live in a community of just under 150 homes with historically low turnover, the highest number of homes available I have seen is 8, currently there is 1. I get mail and notes on the door from real estate agents on a regular basis. When our neighbor's house was for sale, I had buyers come over to ask if we were interested in selling. I recently got a letter from a couple who had looked at our home when it was for sale 7 years ago. They are relocating back to this area and offered us a great price for our home, even sent a business card of the agent they are working with. Unfortunately, we are not ready to move.

As for the dilemma, I would get the offer in writing and give the neighbor 24 hours to match or beat the offer. That is too much money to leave on the table for a verbal agreement that has not been acted on in a month!

    Bookmark   June 19, 2014 at 1:28PM
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ncrealestateguy

I was wondering the same thing as others Weedy... why has one month gone my and neither the seller nor the buyer has thought it necessary to get everything in writing? That's a bit odd, even for friendly neighbors.

    Bookmark   June 19, 2014 at 9:13PM
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redcurls

I would make sure that the agent who came knocking can only represent you with THIS particular buyer he/she supposedly has. Do not simply LIST with this person unless that is what you want. I smell a rat here. I also agree you should show the neighbor your offer and give them a chance to kick out the newbies.

    Bookmark   June 20, 2014 at 4:11AM
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c9pilot

Good thoughts here. Obviously the agent already knows about the lower offer and could be dangling a carrot to the seller, which may or may not come to fruition.
I'd tell the agent that they need to bring that offer ASAP.
Meanwhile, I'd feel obligated to go back to the neighbor and tell them truthfully, that they don't have a contract and I'm expecting a higher offer within so many days. Push them to bring me their own contract but they will now be competing with this other offer.
This is not far off from a similar situation where my tenant was buying my house and had to extend closing because of loan issues....I let him know that if he didn't close in a week we were voiding the contract, because the home value was increasing about $10K per week in that market (2003 or so) and we were now approaching $60K that I was "losing".

    Bookmark   June 20, 2014 at 3:13PM
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talley_sue_nyc

For $30K? That's a lot of money.

And it's been a month.

I'd say, "Neighbors, we've had an offer of $30K more than the one you made. We can't honor that verbal agreement. If you want to match that price, and put down a deposit and sign a contract within 24 hours, that would be great. Otherwise, we have to act in our own best interests."

There's a reason that verbal contracts are never binding in real-estate situations.

    Bookmark   June 21, 2014 at 8:47PM
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karyn

In both cases, the offered price is without even putting it on the market so there is no real knowledge of what the market will actually pay - without listing it and waiting for offers to come in. Chances are, if one has two unsolicited "offers" without ever even listing it - it could be worth much more than either offer.

Without a contract, there is no obligation to anyone. The lack of interest in having a contact shows lack of interest in buying/selling on all sides. If this person actually wants to sell a house they need to get serious and stop playing around. If you don't want to use agents - get an attorney.

    Bookmark   June 22, 2014 at 6:30AM
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runninginplace

I think it's way past time, as others have said, that the seller turns this into a factual and legal question and not a moral one.

So, instead of having a vague feeling about what she thinks her house is worth, get an appraisal.

Instead of fuming about the buyer's lack of initiative, after the appraisal comes in (and assuming it is indeed higher than the verbal offer, which isn't at all clear yet) tell the prospective buyer about it.

And last but not least, take with a HUGE grain of salt the realtor who showed up at the door. Re-reading, there is absolutely not an offer in place for $30K higher than what's being discussed. There is a realtor claiming that she *might* have someone who *might* be interested. That is a far, far cry from presenting a valid signed offer to purchase the house.

As long as everyone is honest and straightforward this can proceed as what it is: a business transaction. Getting it tangled up with emotions of resentment, betrayal, and greed (all of which seem to be in play here) makes life much harder than it needs to be. It's just selling a house, not anything to do with friendship, owing anyone anything and of course getting the best price for an item which is for sale.

And of course in the end it's also about not getting sucked into a sales pitch that could end up costing the seller a sure thing for a smoke 'n mirrors better deal....or counting on a smoke 'n mirrors neighbor sale that doesn't come through either. Get the facts straight and get going on the sale of the house!

    Bookmark   June 22, 2014 at 9:00AM
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azmom

I saw the post when it first appeared... I wondered, and I am still wondering why there is a moral dilemma here, since there is no real, written offer from either the neighbor or the realtor.

The seller surely is inactive for someone wants to sell a house.

    Bookmark   June 22, 2014 at 2:44PM
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sushipup1

The person who posted was asking the question for a friend. It was not the OP who had the problem.

    Bookmark   June 22, 2014 at 4:14PM
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