Profile picture for user3718322

Buying process advice

I am an overseas investor and have been looking for a property in Fremont, CA for some time now.  The home buying process is very different from the process we have in the UK so I am a little confused.

I have found a property in Fremont and made an offer and signed a counter offer which was accepted.  However I have had some reservations about going ahead with the purchase.  I think perhaps I have over paid on it after doing comps - although there are not many comps to go by. Also I had a termite inspection done and it did raise a few issues. I also have not even seen the property although I know the apartment complex having lived there a while back.  After I raised some concerns about going ahead with the purchase my agent is saying the sellers may want to take out a law suit against me.  I have not deposited any earnest monies through an escrow account at this time so I have nothing on deposit. Any advice would be very warmly welcomed.  Thank you in advance for your help.  All best.
  • June 03 2013 - Fremont
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Answers (5)

Profile picture for Pacita Dimacali
If you haven't removed any contingencies --- you should be able to back out of the deal. But there is an issue of "good faith" when you wrote your offer. This article explains: "Every contract has an implied condition that each party to the contract must act in good faith ad would not deliberately hinder the completion of the contract. Failure to act in good faith will result in breach of contract and liability for resulting damages."

It would help if you provided the other terms of the contract --- like within how many days did you agree to submit your deposit? Usually, it's 3 days after acceptance of escrow. If you didn't, the seller's agent should have issued a notice for you to perform because that is a required condition of escrow.

$1000 for termite damage -- good lord, if that's all there is, that's hardly anything to complain about. And for your agent to pay for that, well, heck, that sounds good (but again, the agent will get more in return IF the deal closes). For this amount, it is not unusual for the agent(s) to help out.

Since you waived the appraisal contingency -- and you didn't mention a loan approval contingency, sounds like you are paying in cash.

So if your agent is paying for the $1000 pest...

What is your real objection to completing the sale other than you're having second thoughts?
  • June 14 2013
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Hi Rob.  I think there is a lot more going on here - and you certainly want to be 100% certain prior to removing the contingencies -  but I'll just answer your specific question about the termite.... Agents often DO offer something to their clients to assist the process and/or housewarming items.  I have reduced my commissions to assist with closing costs or things like that; provided gift cards at closing, etc.  So, it is a nice gesture for the agent to offer to pay the termite.  However, I would caution that such an offer should be designed to assist and/or as a 'thank you' ... so just be cautious as to the motive.  If you're feeling pressured to proceed - that's typically a red flag.  Also - I would advise to get any such agreement in writing, especially if you're counting on it (as opposed to just a thank you gift at the end).    
Good luck! 
  • June 03 2013
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Profile picture for user3718322
Thanks Devin for your advice. I guess I should have done a little more homework before I took this on - in the UK the process is very different.  I expected my agent to let me know my rights and the process of buying a property - highlighting deadlines etc and what I was signing. The counter offer stated the purchase price, close of escrow (14 days - which expires today), inspection to be removed in 7 days, and appraisal contingency is waived.  I did sign that document. But I have not signed the removal of all contingencies form. Also I have not deposited any monies with an escrow service. When I raised my concerns regarding the termite inspection (which will cost at least $1,000) to fix, my agent replied that he will pay for the termite inspection as a gift to me - is this normal?  Thanks once again for all your helpful advice. Cheers, Rob.
  • June 03 2013
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Wow - sounds like your agent is NOT on your side.  I am highly concerned about your agent's response, and that, to me, would be a deal breaker.  Is the agent also the Seller's agent?  In any event, that response is unacceptable and means to me only one thing... your agent is more concerned about closing the deal than protecting your interest.  

I am a California attorney - here's the legal info: 
  
True - if you signed a contract, you're obligated to its terms.  However, the standard California Residential Purchase Agreement has many safeguards, such as inspections, termite, appraisals, etc.  I of course don't have your contract, so am not certain of the precise terms.  However, the FIRST requirement is always the initial deposit.  So, if you haven't put that in yet, the deal will would typically die.  A Seller may have rights to enforce the deal absent putting in the deposit, but that's a really hard case in California, and essentially impossible against a foreign individual.  You indicate that a termite report already occurred without the initial deposit?  Generally, any red flags in the termite report would warrant further discussion and potentially cancel the deal or allow for further negotiation.  Again, the Purchase Agreement would typically address these issues at the outset.  

You need to talk to your agent about your options.  If he gives the same response, you need to call the Broker directly (your agent is likely a "sales" agent, below a "Broker").  If still no luck there, you may want to consult an attorney.  

Good luck.  
  • June 03 2013
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Profile picture for Tony Ngai
You can refer to your purchase agreement.  If you have inspection contingency and have not remove them, you have the right to back out of your contract.    As always, please consult with an attorney  that specializes in real estate.
  • June 03 2013
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