Sunday, March 03, 2013

Deal graveyard, early March edition

A couple of deals fell apart last month and I'm here to dish the dirt.

The first was 2912 Buena Vista in Burbank, pictured above.  This sharp flip is owned by a group out of the Inland Empire who have their own real estate company.  My buyer clients originally submitted a full-price offer in January, but had to go through all sorts of gyrations to get the sellers to accept it a month later.  As many of you know, all real estate contracts must be in writing, and the Department of Real Estate and California Association of Realtors have contract forms.  These forms have been vetted by many generations of attorneys.  There is no reason not to use them.  So I was surprised to get back the sellers' personal contract for my buyers to sign.  No surprise -- the sellers' contract took away all of the buyers' rights.  And also removed all of the sellers' responsibilities.  I advised the buyers not to sign the contract, and predictably, the sellers sold it to somebody else.  Yes, we're disappointed.

The second deal-gone-bad was on 702 E. Olive in Burbank, another flipped home.  My buyers (not the same ones as on BV) loved this home and initially I could see why -- there were huge spaces for entertaining and nice character details. Yes, it is next to an apartment building, but still. The buyers came in over the (then) purchase price and were in escrow for $620k.  For a 2-bedroom in Burbank.  But as I said, they loved it.

Then we did the inspection.  The inspector noticed that there were no vents in half the house. Chimney had cracks.  Roof tile was falling off.  And best of all, there was a lot of loose asbestos in the semi-finished basement, which is a very, very serious health hazard.  The sellers-flippers refused to remedy anything (really? asbestos? You're gonna leave it just lying there?) and after very careful deliberation, the buyers decided to move on.  This house, too, went right back into escrow at a higher price.  To add insult to injury, the escrow company decided to keep $200 of my clients' money for opening escrow and receiving the buyers' deposit (reputable escrow companies don't usually do that).  Needless to say, these buyers are also sadder, but much, much wiser.

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