Verbal Contract Issues

[Serena]

My main question is... Can a realtor lose their license because the buyer and seller entered into a verbal agreement?

The back story...
Our original offer on the house was for $5000 cash back to go towards installing a heating/cooling system. Having that in the contract scared away the first two lenders so, at the sugesstion of the selling agent, the sellers would pay an allowable portion of the closing cost and the remaining ($1550) would be paid cash after we closed on the house. This was a verbal agreement between the selling agent, my agent and the sellers prior to be presented to us. We of course were all for it. Whatever would help close the house. That was in early February 2007.

The seller has refused to pay the $1550 now stating that she didn't understand. The sellers agent, who initiated this agreement, has stated that in the event we take this to court she will not remember entering into such an agreement. My agent of course if backing us. However, my agent has just been told that if we take this to court he will lose this license and face a heavy fine. Now he wants to pay the $1550 to make it go away. I refuse to take his money because it isn't his responsibility, and before anyone replys that I should or that I should let it go because it's only $1550 - it's not about the money it's about the principle.

I have emails from the sellers agent that prove she knows full well about the agreement plus the new contract that was changed from the sellers giving us $5000 to paying $3450 of closing costs were done by her. Unfortunately the $1550 cash back remained verbal because the seller agent told us that if we included it in the contract it could muddle stuff up.

Just so you know, this is in Roanoke, Virginia, my realtor is with Coldwell and the selling agent is with GMAC. I really like my agent but he is a retiree that does real estate on the side as a hobby so I think the selling agent knows that she can bully him.

Any advice, referral or helpfull information is greatly appreciated. Thank you,

[kyle422]

Verbal agreements aren't binding. You say that you have emails in regards to her acknowledging the agreement but you contradict that by saying the "$1550 cash back remained verbal". I'm not an attorney but I don't think you have a chance to win. If your agent is offering to pay for it, let him.

[Dan Connolly]

Typically when you go to a closing there are documents that you sign that state that the entire agreement is reflected on the settlement statement. In other words there are no other "side deals", and you would be committing loan fraud if you make an arrangement for cash back. I think you should let it go and not require your agent to pay you as that would be a continuation of the illegal act. Should the agent have known this and warned you not to enter into the verbal agreement? Yes, but does that mean you should get the money?

[BrandonSternfield]

Frankly, I'd take the agents money, as already stated, to fix the loan fraud.

I'd also send a very calm letter to the opposing realtor, explaining your understanding of them purposefully screwing you over They knew what they were doing, and you just got scammed for 1150.

Maybe even take it up with their branch manager. File a complaint, since the money is moot now.

[Serena]

Verbal contracts are binding, especially when done in a mediated setting. The only verbal contracts involving real estate that aren't binding, in the state of Virginia, are for the sale of property or a lease agreement that is beyond one year. I've done my research - I just am not finding any proof that my realtor will lose his license if I take this to court.

[kyle422]

Verbal contracts are binding, especially when done in a mediated setting. The only verbal contracts involving real estate that aren't binding, in the state of Virginia, are for the sale of property or a lease agreement that is beyond one year.

So is this not a real estate transaction? Sorry, I'm not being a smart ass, but since this is a real estate transaction a verbal agreement is not binding. That also means any addenda to the contract would have to be in writing.
Another issue which the other two posters brought up would be mortgage fraud. You can't give cash back to a buyer without a written agreement that is known by all parties including the lender.

[Dan Connolly]

Verbal contracts may be binding if everyone agrees but they are not enforceable. Going to court is not wise, in my opinion, as you were breaking the law by having an agreement outside of the settlement statement. You were a party to loan fraud, plain and simple. That is why your REALTOR's license is in jeprody.

I am not a lawyer and my posts are simply my opinion.

[Serena]

I guess the cash back is part of the purchase. I wasn't thinking of it in that term. So if the worst that could happen to me losing the mortgage? Cause that would be bad for the sellers as well.

[Dan Connolly]

How would that be bad for the Sellers? They already have their money. If your lender foreclosed that wouldn't affect the Seller. Not that they would, but loan fraud on a closing IS a felony. Would they pursue it and press charges? maybe not, but losing the mortgage is not necessarily the worst thing that could happen.

I am not a lawyer and my posts are simply my opinion.

[Lydia]

Let it go. Accept the 'loss' of the $1550 as a valuable lesson learned about obtaining quality representation even in simple real estate deals.

It astonishes me that people still want to FSBO when situations like you describe happen every day. I am sorry that you were scammed.