Stuck in escrow with an investor
My uncle passed without a will, and I am the administrator of his probate estate. He has a late 1890’s Victorian home in Los Angeles. It’s not a great area and the home needs a lot of work. We originally had an offer that was just $10,000 over asking, so I decided to hold out for a better price. Then an investor wrote an offer for $50,000 over and we opened escrow.
We were supposed to close in 10 days. Five days in, they did their inspections and asked for an $80,000 price reduction. We said no, and escrow sent out cancellation papers. The buyer refused to sign. Now, I want to open escrow with the first offer. But escrow says they can’t open a new escrow until the old one signs the cancellation. I really don’t know how we got into this mess. It seems that as the seller, we aren’t protected – just the buyer. I am wondering what our next step should be.
Stuck in Escrow With an Investor
Dear Stuck in Escrow,
I am not a real estate attorney and can’t offer legal advice, which you likely need. However, I can relate to you, my experience. Over the years, I have sold many fixers and I have learned that often these investors make blind offers. A blind real estate offer is one where the buyer hasn’t taken the trouble to view the home. If the offer is accepted, then the investor will view the home and decide if he wants to move forward and at what price.
When there is a lockbox at the property, I obtain the “lockbox reading” to verify the buyer’s agent has opened the lockbox. Assuming they have, we then move forward with a counteroffer. With a ten-day escrow, timelines are very tight.
Consequently, you have learned that some investor wrote an offer for $50,000 over knowing that they will not close escrow at that price. What has happened in your circumstance is that they have tied up your property.
What happens now? I am assuming contingences were removed in writing. I believe that if you consult with a real estate attorney, they might tell you the cancellation instructions need to be revoked and a Demand to Close Escrow sent first. At which time, the buyer has three days to cancel. The original escrow company can’t have two escrows on the same property. If the original buyers don’t sign escrow’s cancellation, consult with your real estate attorney. Ask if you can simply open escrow with a different escrow company.