|By Debbie Gardner, PRIME Editor|
Eileen Pratt knows that the fault is, in essence, hers, for going for a quick sale on her mother's house.
"I'm very willing to admit to making a bad business decision," Pratt told Reminder Publications when she came to us with her story of deception and delays while working with a local homebuying partnership.
And she was clear that she didn't want the name of the business she had dealt with used in the story; she'd already brought a complaint against them before the Pioneer Valley Association of Realtors.
Her purpose in sharing her story was cautionary.
Pratt doesn't want anyone else to have to endure the delays and extra expenses she did while waiting for that "quick sale."
It could happen to anyone
Pratt was introduced to the business of homebuying in June 2006 while she was negotiating to sell her deceased mother's house in order to complete the estate.
She said she was looking to complete the sale as quickly as possible; her mother's lawyer had told her that a trust established for Pratt's disabled brother couldn't be completed until the house was sold.
"I had interviewed some realtors," Pratt said. "They said a house like mine [built in 1898, owned by her family since 1954], because it was not updated, would probably sell for between $110,000 and $120,000 and was taking an average of four months to sell in that area."
Through a friend in the building trades, Pratt said she heard about "a man who buys houses."
She decided to invite him to look at the property.
"He brought along his partner in the homebuying business," Pratt said. "They offered $105,000, which was lower than what the realtor had said, but that [offer] came with a promise."
"The promise," Pratt continued, "was that they had investors and had cash and could close in 30 days with absolutely no hassle."
Pratt said the pair even presented her with a letter from their broker stating that the partnership had the money to buy her mother's house.
Anxious to settle matters for her brother, Pratt agreed to work with these homebuyers.
In retrospect, Pratt, who is an active advocate for the Consumer Funeral Alliance, which urges people to check prices and ask detailed questions when making funeral arrangements, said she didn't ask enough questions when dealing with the homebuyers.
"I wish I had required more than just the letter from the broker," Pratt said. "I should have asked for some real proof [of capital], financial records or something."
The three-month "quick sale"
Pratt said that, looking back, she can see that the problems started with the initial paperwork.
"They insisted on writing up the purchase and sale agreement," Pratt said of her dealing with the homebuying business. "Our attorney said that was OK as long as he could review it."
Her lawyer approved the agreement, which set a closing on Aug. 21, the date the homebuying business chose.
However, she said her attorney neglected to suggest that she ask to have the words "time is of the essence" added to the agreement.
And when the Aug. 21 closing date arrived, the house sale didn't go through.
They went into what I would call a well-orchestrated series of stalls," Pratt said of the homebuying business. "They started by switching lawyers without telling us . then every time [their lawyer] set another date, [he] would come in with an excuse why they couldn't close."
Pratt said those excuses ranged from the homebuying business not being ready to cut the check to their funding falling through to the company needing to secure a loan to purchase the property.
"What shocked me . that date on the purchase and sale agreement .it means nothing without the wording [time is of the essence]," Pratt said. "The other party can stall for a long time."
"Time is of the essence"
Pratt said she learned too late how critical the wording of a purchase and sale agreement can be.
Even though she sought legal advice and a review before signing the initial agreement, that still didn't protect her from delays and questionable dealings on the part of the homebuying business.
She said her lawyer didn't even mention the use of the phrase "time is of the essence" until after the delays began.
"He claimed those words aren't used much in Massachusetts," Pratt said. "He said that if the wording is used, [and] if our side had any delays, problems with the title, etc, and we were holding up the sale, the other party could get out of the deal."
But Pratt said inserting the phrase "time is of the essence" would have been ideal in her situation because she knew the title of her mother's house was in order.
And when her lawyer tried to add the phrasing to one of the re-made agreements, Pratt said the homebuying business refused.
Pratt said she then tried to have the homebuying business declared in default for missing successive deadlines for the sale.
"They threatened to 'red flag' the house," Pratt said. "That meant they filed a purchase and sale agreement with the Registry of Deeds."
She said that action made it impossible for her to break the agreement and hire another realtor to sell her property.
Getting to the truth
Frustrated, Pratt said she finally called the broker who had allegedly signed the letter guaranteeing financing.
"He said it was not a scam, that they were going to buy the house and he was going to supply the financing," Pratt said. "But he claimed he had told the homebuying business that he would only give them the money once they had sold another of their properties."
"They failed to disclose that fact either verbally or in the purchase and sale agreement, " Pratt said of the homebuying business.
The sale of her mother's home was finally completed on Oct. 13, 2006, approximately three and a half months after she agreed to the "quick sale," and a month and a half after the originally negotiated closing date.
Had she gone with a realtor, the sale probably would have taken four months, and brought her approximately $5,000 more in income after commission
She said she also would have avoided the anxiety of a delayed sale, and the added legal expenses incurred in constantly re-negotiating the closing date.
Be a smart buyer or seller
To find out how common Pratt experience might be in the Pioneer Valley, Reminder Publications contacted the Realtor Association of Pioneer Valley (RAPV), the board that Pratt brought her ethics complaint before.
According to Edward Moore, executive vice president of the RAPV, cases such as Pratt's are not that common.
He said Pratt's case was the only one to come before the RAPV's board of ethics this year.
"Those are few and far between," Moore said.
To protect themselves from any possible problems with a real estate transaction, Moore said consumers need to be certain they are dealing with a realtor.
"The title 'realtor' means [the individual has] membership in a local, state and national association or realtors," Moore said. "They agree to a strict code of ethics that is higher than what the law dictates."
And, as in the case with Pratt's situation, if there is an alleged violation of that strict code, consumers have a means of redress.
"If a realtor has been alleged to have violated a code of ethics, we have an administrative hearing," Moore said. "Both sides are allowed to present evidence and cross-examine the other side. Than we give a ruling."
Moore said disciplinary action resulting from an alleged ethics violation can range from a letter of warning to fines to a requirement that the realtor attend classes in ethics to a termination of membership.
Moore said that potential homebuyer and sellers also want to get as much information about the process as possible before embarking on a transaction.
"There are homebuyer seminars, and home seller seminars [in the area], some of them are quite good," he said.
He also said to be honest with your realtor about your situation, such as a job transfer that necessitates a quick sale.
"Be upfront with them about what they need to know to do their job," he said.
And, never enter into any agreement unless you are completely comfortable with exactly what it entails.
"It's always advisable that anyone who is not comfortable with a purchase and sale agreement, because it is a legal document, consult legal counsel," Moore said.
He added that anyone in the Pioneer Valley who wishes to verify that a person is a realtor can call the Realtor Association of tPioneer Valley at 413-785-1328 or visit the Association's Web site at www.rapv.com.