A couple of months ago a man approached me wanting to buy my house (in
California), even though we had not yet listed it. We thought his offer
was generous and signed a one-sentence agreement to sell the property
to him at a particular price. The agreement did not specify a date by
which the sale had to be consummated.

Shortly afterward we opened escrow, and the escrow instructions
specified a date about 60 days away: "[Seller and buyer] will execute
and deliver any instruments and/or funds...all of which [escrow company
is] instructed to use on or before [date]". I have provided all the
documents I am supposed to, but the date is approaching and the
appraisal hasn't been done.

The escrow officer tells me that if I refuse to extend the sale is
cancelled. Apparently the buyer thinks so too, or he wouldn't seek an
extension, but when I told him that I would sign an extension only if
we increased the sale price, he told me that we had a deal, referring
to the original agreement with no closing date.

Is it ethical to ask for more in exchange for extending the escrow
agreement? Does our earlier agreement with no closing date bind me
forever?

I'm not worried about the buyer walking away if I ask too much, because
potential buyers have continued to approach me, even though the house
is not on the market, offering much higher amounts. I turned them down
only because I had already agreed to sell the house to this buyer.

Thanks,
Ed

I would check with an attorney about if the original agreement is binding
forever. Should not be very expensive, but could cost you quite a bit if
you sell to someone else and this person causes trouble....

You should have had an attorney write the original agreement!


"Ed Roberts Jr" wrote in message
A couple of months ago a man approached me wanting to buy my house (in
California), even though we had not yet listed it. We thought his offer
was generous and signed a one-sentence agreement to sell the property
to him at a particular price. The agreement did not specify a date by
which the sale had to be consummated.

Shortly afterward we opened escrow, and the escrow instructions
specified a date about 60 days away: "[Seller and buyer] will execute
and deliver any instruments and/or funds...all of which [escrow company
is] instructed to use on or before [date]". I have provided all the
documents I am supposed to, but the date is approaching and the
appraisal hasn't been done.

The escrow officer tells me that if I refuse to extend the sale is
cancelled. Apparently the buyer thinks so too, or he wouldn't seek an
extension, but when I told him that I would sign an extension only if
we increased the sale price, he told me that we had a deal, referring
to the original agreement with no closing date.

Is it ethical to ask for more in exchange for extending the escrow
agreement? Does our earlier agreement with no closing date bind me
forever?

I'm not worried about the buyer walking away if I ask too much, because
potential buyers have continued to approach me, even though the house
is not on the market, offering much higher amounts. I turned them down
only because I had already agreed to sell the house to this buyer.

Thanks,
Ed

"Ed Roberts Jr" writes:
A couple of months ago a man approached me wanting to buy my house (in
California), even though we had not yet listed it. We thought his offer
was generous and signed a one-sentence agreement to sell the property
to him at a particular price. The agreement did not specify a date by
which the sale had to be consummated.

A real estate attorney is the best money ever spent in such a
transaction, next to your inspector o nteh buyer's end. They'll
handle everything for a mere $600, or possibly less in your area.

Best Regards,
--
Todd H.
http://www.toddh.net/

I have spoken to a lawyer. He agreed with the escrow officer that the
deal is off if the buyer can't complete it by the date in the escrow
agreement, unless we agree to amend. The lawyer also said that if I
wanted to negotiate for an increase in the sales price, in exchange for
extending the escrow agreement, I should have no problem doing so.

The lawyer did say that the buyer could file a lis pendens on the
property to compel specific performance, and that the judge's
interpretation might be different than his own, but I suppose that's
always true anyway.

However, just because a lawyer says it OK doesn't make it right. What
do you think, is this sleazy and underhanded of me, or perfectly
appropriate behavior? Does it depend on how much extra I ask for?

Ed

"Ed Roberts Jr" wrote:
I have spoken to a lawyer. He agreed with the escrow officer that the
deal is off if the buyer can't complete it by the date in the escrow
agreement, unless we agree to amend. The lawyer also said that if I
wanted to negotiate for an increase in the sales price, in exchange for
extending the escrow agreement, I should have no problem doing so.

The lawyer did say that the buyer could file a lis pendens on the
property to compel specific performance, and that the judge's
interpretation might be different than his own, but I suppose that's
always true anyway.

However, just because a lawyer says it OK doesn't make it right. What
do you think, is this sleazy and underhanded of me, or perfectly
appropriate behavior? Does it depend on how much extra I ask for?

IIRC, the delay is because the appraisal hasn't been done. Now, unless the
buyer somehow caused the appraisal to be late, I'd considering raising the ante
at this point "sleazy and underhanded". OTOH, if the buyer took advantage of
your ignorance by offering you a below-market buying price, then I'd consider it
his reaping as he sowed.

Why anyone would sign a one sentence open ended contract is beyond me.
Clearly you need professional help. This is a good example for people
who go around telling others that they don't need a lawyer to buy a
house. But I think the advice your lawyer now gave you is correct. In
addition to signing the one line contract, you both apparently later
signed the escrow contract that stipulated closing in 60 days. The
remaining question is what exactly has been done so far? Did he apply
for a mortgage promptly? (A good contract would have required that)
You certainly can ask what's going on, if he's applied, etc and also
ask for contact info so you can verify it. If he's been dragging his
feet, then you certainly have every moral and legal right to stick to
the original closing date. I'd have your lawyer send him a letter
indicating that the date is final.

If you hadn't signed the escrow agreement, you;d be in much deeper
trouble. He certainly can't tie you up forever, but whether 60, 90,
180 days is the breaking point would be open to argument. And if you
wanted to sell the house to someone else, you'd probably have to go to
court to have a judge decide the issue, unless the original buyer
agreed to walk.

As for raising the price with this buyer, why would you? If the skunk
hasn;t even gotten an appraisal at 60 days, why would you think the
next time is gonna be any different?

The buyers did not send in all the parts of their loan application
until two or three weeks after escrow opened, even though I called
every few days those first two weeks to find out how things were going.

One of the buyers has been a real estate broker for over 10 years, with
four agents now under him. The other man owns what appears to be a
successful business. I think they have enough savvy between them that
I, who am neither a businessman nor real estate professional, am not
taking undue advantage of them. And since they do not plan to live in
the house, they are not under inordinate pressure to close because,
e.g., they gave notice to their old landlords.

We have now amended the agreement by both raising the sales price and
extending the deadline. My belief that the house was underpriced was
only strengthened by how easily the buyers agreed once they realized I
was not afraid of the deal collapsing and having to put the house on
the market.

Ed