Hi All- I have been gone for a spell and am just checking in. Here is a scenario that we will probably start seeing more of. A potential listing scenario. The guy is an investor, botught the property two years ago. He has tapped and tapped and tapped into the equity. He owes about 270k and that is probably what we will list it for. He haas told me that he will have to bring money to closing and obviously he will need to. I have a wee bit of heartburn as my listings have always had enough to satisfy the bank note, the closing costs and the Realtor fees.
What do you do in this case to make certain you get paid? Also, I am liable for the other agents fees if this guy does not pay at closing. Yeah, I am certain I could sue him...just do not care to mess qith all of that if I do not have to.
I hate walking away from listings unless they are overpriced, but this scenario is a little concerning...thoughts?

I"d love to hear the answer to this too. I suspect that yes, you are liable for the buyer agent's commission and there is certainly no guarantee that the seller will show up with his checkbook in hand.

He knows he has to bring money to the table anyways, is says he is prepared to do so. Can't you Escrow the commission due at the time of listing? If he flakes at least you are not out of pocket paying a deserved commission.

Just a thought and trying to throw out an idea. Never been in this situation.

Exactly Jennifer. We may start seeing alot of these. I know for a fact that I am liable for the buyers commissions. That agent would sue me and I would sue the seller...good times. I wonder about opening an escrow acct. for the seller to put some fees in...or just walking away from this one.

Have you contacted your closing attorney that you prefer to work with to ask their advise? I am unfamiliar with closing proceedures in Arizona.

Whenever I have had questions, my attorney's have always taken my calls and helped me through my questions. I am sure they see things like this from time to time.

I don't have a closing attorney. We do not use them here for transactions.

If the seller doesn't show up at the closing table (at the very least to sign the paperwork) then the home doesn't sell and he could be in default of the contract (at which point you could sue for your commission as it has been earned when the buyer is sitting at the table waiting to close).

If the seller simply doesn't bring enough cash to close, then the deal can't go through.

The title company has to be able to account for all funds on the HUD statement (including the commission disbursement(s)) and if those funds are not available, the deal cannot close.

SO the money will have to come from either the buyer, the seller, or the realtor (or miraculously fall from the sky) in order for the deal to close.

If the buyer is at the closing with all their issues buttoned up and the seller shows up but cannot close due to lack of funds, then the seller could still be in default just as if he hadn't shown up at all.

I would explain to your seller that they must show up, and that the title company must be able to account for all funds, or the deal won't close, he'll still not have sold the home, AND there's potential for a lawsuit if he doesn't pay the commission that has been earned for services rendered (and it's out of your hands, because the buyer's agent is definitely going to expect to be paid, and that's got to come from somewhere).

Of course, if you think he'll show up to the table with the funds but you're nervous, ride it out and see what happens.

That's what I'd be thinking about...and that's probably what I'd go talk to my broker about.

Have you thought of asking the Bank for a short sale?

What is your reason to take this listing in the first place when you think this person/ Seller is not trustworthy enough to do business with?

Where did I say that they were not trustworthy? I need to scroll back and read my messages probably, but I do not think I even insinuated that.
My question was aimed at how are folks "covering" themselves in a situation like this. Are they doing a short sale, taking the guys word for it, etc. I was not asking if I should take the listing or not.
Nowhere did I say I did not trust this guy.

I assumed you did not trust the guy. If you trust him take the listing and risk. If you are in doubt collect the commission up front and escrow it. I would not give up the listing unless I really did not trust him.

thanks REO. That is what I have decided to do. I do not know him enough to trust or distrust. I am going to list it and bank on him bringing money to closing.

I would collect the commission and fees upfront and put it in escrow.

This is one reason why its critical to present the seller with an accurate Net Sheet at the time of listing the property and also at the time the offer is accepted. Make certain the seller knows exactly how much he needs to bring to the table.

I echo what everyone else has said so far. If you encounter this situation you obviously want to cover yourself, so collect the commission up front, put it in an escrow and proceed with the listing. That way you're at least somewhat protected.