We have been working with a couple from Ohio who are moving from Ohio to Georgia. After over 6 months of showing them homes on 4 seperate trips down to Georgia, we finally found the right home and put it under contract. It is a cash transaction with the seller holding the earnest money. The due diligence has expired and there are no contingencies that need to be met. The inspection was completed and the house passed with no issues, they have the cash in their account and the seller has verification of the available funds, and we are set to close on Jan. 30th. The problem is that I think the buyer is going to walk. She has a disabled daughter who is in a group home in Ohio and she is not yet found "the perfect" place for her to be placed when they bring her here. We have been helping them research some various facilities but I keep telling her that this is something she really can't do over the phone or internet, she needs to be here to physically visit the homes. This was not an issue until a couple days ago. In fact they have family in Ohio and their plans were to leave her there with the extended family to watch over her and then eventually equip the home so she could live with them.
She sent me an email yesterday stating that she didn't feel like she could move to Georgia unless she was 100% convinced that there is "the perfect" group home for her daughter and that she might just have to lose her earnest money. My wife thinks it's just a case of buyers remorse and that they will come through and show up for the closing, I'm not so sure.

My question is this....If they walk, what kind of issues am I going to have to deal with to get our commission. With the amount of time and energy we have invested in this couple over the past 6 months, I fully intend to exercise my rights under the contract. If she tells us that they aren't coming and they want to just give up their earnest money, i want to tell her that it isn't that simple and that she may need to read her contract to see what other financial obligations she is responsible for if she defaults. Will I have to go to Ohio to sue for damages, or can I file in Georgia to obtain a judgement and them try to enforce it in Ohio? Have any of you ever been successful it getting paid after a buyer/seller walking? Right now I'm so ticked about this I want to throw her chicken *5^t husband through a wall. I think he his behind all of this because he really wanted a home in a more rural setting and gave into his wife's wishes and is now having second thoughts. They are just using this thing with their daughter as an excuse. BTW...this will make the 3rd house we have been under contract with them. They walked on the first 2 prior to due diligence but that was because of inspection issues. I don't think they quite understand the seriousness of their current situation. The other agent says that if they walk, not only will he sue for damages, his seller may sue to enforce the contract. Can I tell her this? Help!!

One more thing...Our contract does have a default section which does state that a) the non-defaulting party may pursue any lawful remedy against the defaulting party, and b) the defaulting party shall pay as liquidated damages to every broker involved in this transaction with whom the defaulting party does not have a brokerage engagement agreement an amount equal to the commission the broker would have received had the transaction closed. We have a buyers brokerage agreement with the client that entitles us to 3% of the selling price if they default on the contract.

I don't know how your Buyer Broker Agreement reads; but when these deals fall apart, we (as the Listing Agent) usually have to be satisfied with ½ of the Earnest Money (with the Seller keeping the other ½), as our entire liquidated damages. That's part of the reason we LIKE large EMDs. But the Buyer's Agent (or the Sub Agent/Selling Agent) is usually left out in the cold if their Customer/Client balked. I gather that in this case, you ARE NOT the Listing Agency.

This is where taking a Retainer Fee from your Buyer Client, in advance of getting deeply involved in an Interstate Transaction, would reap dividends now.


Is that Clause in your Buyer Broker Contract, in the Georgia P&S Contract or in the pertinent Listing Agreement ?

If there is no sale, you're usually out of luck pursuing a Commission; especially one that requires litigation across State Lines. It is usually found that payment for all of our work in advance of a Closing is contingent upon there being a Sale. If there was no Sale, there is no Commission. That's why a Retainer Fee is useful when dealing with the unknown.

Good Luck!

The Buyers brokerage agreement states that the buyer is obligated to pay us a 3% commission if they default after the due diligence has passed and all contingencies have been met. That is where we are at today. As of this morning, no additional word from our buyers. Keeping our fingers crossed.

Maybe it's advisable to consult your Attorney, and obtain his/her suggestions on how best to alert the Buyers of what could be their obligation to you . . . . even if there is no sale. (as part of your fiduciary to them, as your Clients, you are probably obligated to warn them of the possible repercussions of their default, EVEN if you might be one of the beneficiaries)

These always have to be handled gingerly, as you don't want to jeopardize any future commissions with these Buyers . . . . but your instincts may already indicate that there's little chance of that anyway.

Your Attorney may be valuable in just making sure you don't cripple your chance of making the pursuit successful if they fail to appear for the Closing . . . . that's next Monday, right ?

First question:

Are YOU the principal broker?? If you do not own a brokerage in Georgia as the qualifying broker then it is not YOUR commission.

If you are just a licensed sales person or an associate broker (has a brokers license but are affiliated under another company and head broker) then it i snot your call.

You are simply performing activities for the broker and their clients.

This is how it works in Georgia.Agents get this little fact messed up all the time and keep referring to the money as THEIR COMMISSION.

The broker will decide if they want to pursue for damages or not.If you are on a high split with the brokerage say 80/20 and the commission is 5,000 then we are talking 1,000 to me if I sue and want and collect minus the money I spend upfront in court costs.

That isn't worth my time to pursue as a broker.Plus I might not want the bad karma that goes with burning a buyer.They could go all over the internet slandering my brokerage whether it be legal or not and cost me more than 1,000 in bad press.

If you were talking tens of thousands of dollars in commissions to the brokerage after split that might be a different situation where time and costs would make sense if the buyers had assets to go after.

Remember winning a judgment in court an collecting are 2 VERY DIFFERENT things.A judgment is worthless if you can't collect.

Generally you cannot sue AND take the earnest money.It is a one or the other provision.This is why you make the buyer put up a large chunk of money to have skin in the game.It has to hurt bad for them to walk away otherwise one little thing goes wrong or changes in their life and they will pull the plug.

Usually the contract reads liquidated damages in full for accepting the earnest money.

300 per transaction company brokers definitely will not pursue a lawsuit as there is no money for them in it.

Best bet is to tell the buyers they have a legally enforceable contract and the sellers plan on making the perform. The buyers will probably waffle and perform.

Even if you know the buyers will not be at the closing table in Georgia you the brokers/agents and the sellers need to go to the closing.The exercise shows you were ready to close the deal and the buyers didn't show.The sellers have to show they were ready to perform their end of the contract.

No legal advice

Also as an agent for your business you need to look at the cost of time and money.If you are on an 80/20 split and would make 4,000 and have been working with them for 6 months the payout is low.

You have all those meetings and taking them out and costs so your return is much lower.If this was a referral you are making next to nothing.

I do work with buyers for 6 months or more but it is on the commercial side where the checks are in the 5 to 6 figures for me so it is worth my time.

Commercial investors buy multiple properties frequently where most home purchases you will get lucky to get a referral and they only buy once every 5 years or so.

You need to be real selective of who you work with and refer out marginal or flaky buyers and sellers.

This way if by some miracle it closes the person you referred it to burned a ton of hours to make a small return.You did nothing but generate the lead and get a small check which is a great return on your investment.

The only time I handle headaches is if I have a big client that represents a lot of money to me and by handling the small stuff I get the very big investment deals.

You have to analyze over the years what the relationship could generate in income and decide if it is worth going after.

Are you serious???????

Courts are notoriously consumer friendly. You would look like a greedy, self centered, selfish so&so when the court hears the story about your client canceling the contract because of the disabled daughter.

If you are lucky, you will walk away from that courtroom with your tail between your legs and no money, if you are not so lucky, some reporter will pick it up and smear your name across the various media.

Learn to pick your battles.

You know Georgia, I don't-- but typically a buyer can make a seller perform, but no one can force a buyer to buy. He will lose his EMD, that's for sure.

If the OP is determined to pursue based on the buyer-broker agreement, or whatever it's called in GA, I guess he can, and I'm betting, based on his outrage, he will.

In answer to his question about venue, generally wherever the contract was signed is the venue. No legal advice. The GA buyer-broker contract should have something in it about that; but maybe not. Whoever said check with an attorney about filing is correct. If the venue is Ohio, that ratchets up the cost to pursue.

My take on due diligence is that it can continue right up to COE; i.e., if the buyer suddenly decides the 3rd BR is too small, he can walk. He will leave his EMD as forfeit, but no one can make him buy the house.

The rest of the story....The buyer's wife called yesterday and said they were not coming to the closing and the deal was dead and they wanted to know what they needed to do to get their earnest money back. I was very upset so instead of lashing out at the her I told her to let me call the other agent and I would get back with her. After a few minutes I put together a carefully worded e-mail where I instructed them to review certain paragraphs of the contract and the buyer's brokerage agreement. I informed her that since the due diligence had expired and there were no available contingencies to exercise that if they didn't close they would be in default. The earnest money would be given to the seller as liquidated damages and they were still responsible for the commission due to both brokers and that they could wire transfer the amount of the commission to the closing attorney for distribution. I then suggested that the seriously consider all of their available options and that they should have their attorney review the documents to verify the accuracy of what I was saying. I then did a brief review of all of the reasons why they decided to purchase the home to begin with, suggested they sleep on it, and call me back this morning.

They called this morning and the deal is back on. They wire transfered the funds for the purchase to the closing attorney and will be in town Monday morning for their final walk through and closing. Thankfully, we dodged a bullet.

FYI... Deal closed today at 11 AM, commission check is in the bank.

HomeTeamGA:

Interesting. so, do you think you acted in the buyer's best interests?

LOL! LMAO!

Interesting thread. It's hard to say how I'd feel after spending 6 months with a client who is walking away from a deal, but from where I'm sitting now I wasn't in agreement with the OP at the outset of the thread.

That is a good question. There are times when it is in the buyers best interest to let them walk. In any event they need to be made aware of the possible ramifications of a default. In this case I can truthfully say yes. We were able to contact a few of the better facilities in this area that could provide for her daughter's needs and they toured them yesterday and found 1 that would be great for her. In the end it was just a case of buyers remorse, they just needed someone to hold their hand through the process.