This post is part of a sponsored collaboration with Redfin.
If you’ve been keeping up with the blog, you’re likely well aware that I decided to sell my house this fall. When I last checked in at the beginning of October, my house was under contract with a closing date of November 17th.
It sounded easy, and after all the work we’d done just to go under contract, it seemed like getting to closing would be the easiest part. Boy, was I wrong. Here’s what happened.
Home Selling Tips: What to Do When an Offer Goes Awry
What it Means to Go Under Contract
Just because a house is under contract doesn’t mean it’s going to sell, or that it will sell quickly. Because it’s such a big purchase, banks and buyers get to do a lot of research (or “due diligence” as they say in the biz) on a home. Typically when your home goes under contract buyers have 10-21 days to get the home inspected and have the home appraised to ensure they buy a home that’s worth the value.
The buyer puts up earnest money; typically some percentage of the home’s value.
This money is given in good faith that the buyer is going to make every effort to buy the home, so the seller takes the home off the market and closes it off to anyone else. If the buyer completes the due diligence in the allotted time frame and finds something that makes them not want to buy, or they simply change their minds but do it in the agreed upon time frame, they get to keep the earnest money. If they don’t complete portions of the process in the applicable time frame and still want to back out, then the seller gets to keep the money.
This is what happened with my buyer and me, as they did not complete the appraisal in the given time frame.
I didn’t back out of the contract when they failed to complete the appraisal, because I knew they loved the home and wanted to continue with the sale. After five weeks where very little happened, they pulled out on the last day of due diligence due to financing reasons, but didn’t provide any verification. If they were having trouble getting financing, why did they wait five weeks to say anything?
By that point, it was early November and I was worried we’d blown our chance to sell the home in 2015 by futzing around with a buyer who didn’t seem all that serious.
They wanted to keep their earnest money, but I felt like they’d changed their minds and wanted to back out without paying for an appraisal while keeping their earnest money at the same time. Meanwhile, I’d taken my home off the market, after turning down multiple offers at the same time theirs was made, only to feel really jerked around.
It was emotional on both sides, conversations became contentious, and it was unimaginably stressful. Especially since I’d never been through a home selling process before.
Here are a handful of tips for what to do when an offer goes awry:
Lean on Your Agent
It’s a big no-no to talk to a buyer directly. As such, I had to rely heavily on my agent to communicate my points to the buyer and their agent. This is where having an agent you feel comfortable with comes in handy. I really, really felt like my agent and the Redfin team were on my side when I began to get a lot of pushback from the buyer over the earnest money dispute.
My agent was able to help me successfully navigate this, patiently took all my phone calls and answered all my questions, and in the end we agreed to split the earnest money with the buyer 60/40, with me receiving the 60% share.
When selling your home it’s important to save all the documents (emails, binding paperwork etc.) and revisit them often. This is especially important when you begin to debate an aspect of the sale and need something to reference. I kept almost everything, but there was a time or two where I’d deleted something and my agent had to resend it. I was lucky to have an organized agent, but not all agents are created equal, so make sure to have your own copy!
Don’t Make Any Plans Until You’re Certain
Buyers and sellers can back out at any time. Sure, earnest money is on the line, but at the end of the day, no one can force you to buy or sell a home if you don’t want to. Trying to play it safe and smart, I wanted to wait until the 21-day contingency period was over to make plans on where I was going to move after closing. When the contingency period was over and we still hadn’t completed an appraisal of the home, I wanted to wait until that was finished, as a low appraisal can completely derail a sale and any future plans.
I’m glad I waited. If I’d jumped the gun and put down a deposit on an apartment, I likely wouldn’t be able to get that money back.
So What Happened Next?
After the contract fell through the Redfin team got my home back on the market the same day, fast as lighting. We had a showing less than 24 hours later and an offer within a week. I’d like to report that I found another buyer and that nearly a month later we’re through due diligence and set to close on the home early in 2016.
But that isn’t where the story ends.
We’ve been having a record rainfall in Atlanta this year, and very early on in the fall, my basement flooded. I ended up with three feet of water in my garage/basement hybrid after the drain in the driveway backed up during a heavy rainfall. The first buyer actually was in the home when it began flooding and called to tell me!
I’ve been in the home for almost three years and never had a problem with water in the basement. My brother and I had been using that area for storage and did lose a few items, although nothing too important or expensive. After the initial flood, I had my contractor come out and do a bit of work on the landscaping and the drain, and crossed my fingers it was just a freak, one-time occurrence during a particularly rainy season.
We didn’t have a problem for eight weeks, even with more heavy rainfall, but the house flooded again the day before I got a second offer on the house.
I was already receiving lower-than-I-liked offers on the house, and on top of that, I knew I needed to fix the drainage issue or provide a credit at closing. Because of all the extensive renovations I'd done to the home, I didn’t feel like I could let the house go for less than what I ideally wanted to make (which I discussed in this post) and so after talking with my agent, I decided to take my home off the market, save up my pennies to fix the drainage issue, and list again in the spring.
I have to admit, telling Redfin I wanted to take my home off the market, kept me up for more than a few nights.
After this campaign, and all the hard work they'd done to market the house to not one, but two excited buyers, I was worried they’d be disappointed.
In many instances, agencies will make sellers pay back any advertising fees spent on marketing the home.
Redfin is different. If the home doesn’t sell (even if you take the home off the market yourself) you never pay any fees, ever. Redfin pays its agents a salary, and they get a bonus even if the home doesn’t sell, as long as their client was happy with the service. This ensures they won’t pressure you to sell if it’s not in your best interest. Will was thoughtful and supportive of my decision, just as he had been throughout the entire process. He even offered to continue to be a resource to me as I prepare my home for sale in the future. Definitely the kind of company I want to do business with and that I want to recommend for my readers to do the same.
So here’s where the story ends (for now):
I’m still in my current home and waiting to see what life throws at me next. I’m continuing to make improvements on the house, which has now become more of a passion project than ever.
At the end of this three-month journey, I hope readers have learned something about what it takes to sell a home. Like most things in life worth having, it’s hard work and you have to bring a lot of patience to the table. If you take away anything from this series, I hope it’s that having the right team on your side makes all the difference.