One for the Curb

We recently listed a property in need of substantial renovation that attracted a lot of attention, eventually drawing three offers, including one from an LLC who wanted to buy the property using funds from an outside investor they claimed to regularly work with, which we saw as a possible red flag. 

We advised our seller to instead select one of the competing offers from a regular all-cash buyer who had submitted a similar amount, going into contract at roughly 10 percent under the list price in light of consistent feedback we had gotten regarding the property. And the fact that the third offer came in substantially lower helped further underscore that we weren’t likely to get more than what was on the table. 

A few days in, the lead offer was cancelled at the end of their due diligence period, so we ended up in contract with the LLC buyer as our plan B after insisting on a 7-day contingency removal timeframe and a quick close. 

It raised a second red flag when they requested their escrow be held by an out-of-town company instead of where we had already opened the order, but we accommodated the request and started setting up the transaction as usual prepping the disclosures and getting the file set up with the new buyer. 

A few days in, the third and final red flag showed up in the form of a text from a local agent who had gotten solicited by a party claiming to have the property under contract, offering it for resale at the full list price. Since she had previously spoken with me she recognized the property and reached out to confirm whether what she was being told by this party was legitimate.

I confirmed that the property was in fact in contract but when we compared notes it revealed the price they were seeking was a full 10 percent higher than what they had it in escrow for, in a play to make a quick profit by tying the property up and attempting a concurrent closing. Turns out our initial instincts had been correct and it was fortunate that we had insisted on aggressive terms to mitigate how long they could shop it around.   

Once apprised of the situation, we immediately notified the LLC’s agent that we were aware of their client attempting to resell the property and had our seller provide a pre-emptive Notice to Perform several days ahead of their Contingency Removal deadline, sending a strong signal that no extensions would be granted to the short timelines that we had negotiated as a condition of accepting their proposal. 

Recognizing that the gig was up, the LLC buyer promptly agreed to cancel their escrow and we ended up going into contract with the third interested party who, after being explained the situation, agreed to come up closer to the price the first two offers had proposed.  

Ultimately, the seller ended up taking a little less than they had initially hoped for, but it was a relief to go back into contract—this time with a real buyer who is ready, willing and able to close as agreed, with no stunts or delays along the way.