Rescinding an Offer

[CarolMN]

Just a question because I am curios: Can a buyer find out if there is a loan (and the amount still due) on a listed contract before he/she sends in a deposit? (I've read several reports of deals falling through because the seller either didn't know he/she would have to pay to sell or didn't have the money to complete the sale).

I think you can find out if the seller is from overseas or if the contract is being sold because of a bankruptcy or a death. It would be nice to know if the sellers are going through a divorce, too. Those things usually mean a longer process. I wound't recommend someone new to DVC offer of those types of contracts. I'd personally still offer on those contracts (for the right contract), but I'd also be prepared to have the deal fall through.

 

[Littlelulu01]

I don’t know if they actually do this or not but it’s pretty low effort to hand off an unpaid balance to a collection company and/or file reports against their credit. Commision on a contract can be in the thousands, and its still revenue. If it happens rarely maybe they do just let it go.

I’m actually not sure it would be this easy. All the listing agent has on a timeshare sale is a piece of paper, not noterized, that says if they back out they still have to pay the commission. Granted the listing agent has them sign something saying they owe a commission regardless of if they sell or don’t sell, but collecting on an unfulfilled promise to pay a commission for a sale that doesn’t happen seems highly unlikely and I’m guessing it is simply never pursued in the timeshare sales industry. The banned from listing with the same agent scenario is likely the only plausible consequence if sellers back out.

You can look sellers deed up on the occ and see if they have a loan through dvd. For Aulani it’s not as easy. Our last Aulani contract had a loan on it. The only way I knew was because the closing company had a nifty login which showed me what was going on with the sale. They posted each step of the process so I could see communication about loan pay off, dues.. I was really surprised they still had a loan for Aulani subsidized. After owning the contract several years they still didn’t come out ahead. That’s when I realized how terribly unsound it really is to finance a timeshare purchase and how many people end up so upside down with an Aulani direct purchase. Even with the loan and unpaid dues and the taxes they had to pay to Hawaii, the entire process didn’t take long at all. Under 60 days total which I attribute to a really on the ball closing company that knew what they were doing.

 

[Nurse4kids]

I’m actually not sure it would be this easy. All the listing agent has on a timeshare sale is a piece of paper, not noterized, that says if they back out they still have to pay the commission. Granted the listing agent has them sign something saying they owe a commission regardless of if they sell or don’t sell, but collecting on an unfulfilled promise to pay a commission for a sale that doesn’t happen seems highly unlikely and I’m guessing it is simply never pursued in the timeshare sales industry. The banned from listing with the same agent scenario is likely the only plausible consequence if sellers back out.

You can look sellers deed up on the occ and see if they have a loan through dvd. For Aulani it’s not as easy. Our last Aulani contract had a loan on it. The only way I knew was because the closing company had a nifty login which showed me what was going on with the sale. They posted each step of the process so I could see communication about loan pay off, dues.. I was really surprised they still had a loan for Aulani subsidized. After owning the contract several years they still didn’t come out ahead. That’s when I realized how terribly unsound it really is to finance a timeshare purchase and how many people end up so upside down with an Aulani direct purchase. Even with the loan and unpaid dues and the taxes they had to pay to Hawaii, the entire process didn’t take long at all. Under 60 days total which I attribute to a really on the ball closing company that knew what they were doing.

I have a feeling the closing company didn’t do much to try to close my sale. When I would call them I couldn’t even reach anyone to get an update. Just voicemails that were rarely returned. I too saw how terrible it is to finance a timeshare when I saw the closing contract. The seller had been paying on the property for 5 years and had barely paid off any of it! They would have had to pay about 3000.00 out of pocket to sell the property!

 

[Littlelulu01]

I have a feeling the closing company didn’t do much to try to close my sale. When I would call them I couldn’t even reach anyone to get an update. Just voicemails that were rarely returned. I too saw how terrible it is to finance a timeshare when I saw the closing contract. The seller had been paying on the property for 5 years and had barely paid off any of it! They would have had to pay about 3000.00 out of pocket to sell the property!

Some sellers would have the means to come up with the cash to close and just take the loss, but if they could hang onto it they probably just decided it was not worth the loss right now. I’m guessing that many of the sellers who find themselves in a position where they are upside down in a timeshare purchase with a big loan, often won’t have the cash to get out of the mess either. Which makes it even less plausible that a broker would go to the trouble of going after the sellers for backing out. I think the best scenario would be to purchase a broker owned contract. Those do come up with the reputable brokers. Wish it was easier. Any time there’s lag time with buyers and sellers I think the likelihood the deal is actually going to close decreases dramatically. If they are dragging feet in the initial process like op’s case, I’d run away.

 

[.landry]

we rescinded an offer as well for exactly this reason. the seller was dragging feet and the broker was also not being very communicative. The scenario that we guessed was that either the seller wasnt sure they wanted to sell or they were waiting until the last possible deadline to sign in case a better offer came along.
but dont despair! we just got the closing docs on a MUCH better overall contract with a different seller. So far its been smooth sailing. everyone has been communicating and documents are being signed quickly.
Get the AKL contract you want!

 

[frabjous]

I’m actually not sure it would be this easy. All the listing agent has on a timeshare sale is a piece of paper, not noterized, that says if they back out they still have to pay the commission.

A signed contract is more than enough to prove a debt for services rendered, which is all you need to hire an agency or report the debt. Notarization isn’t necessary to validate a contract (consider how many contracts all of us enter into for various services we receive and how infrequent we need to notarize)

Granted the listing agent has them sign something saying they owe a commission regardless of if they sell or don’t sell, but collecting on an unfulfilled promise to pay a commission for a sale that doesn’t happen seems highly unlikely

Those are the terms though, and they aren’t unreasonable. If they didn’t like them they shouldn't have signed. The broker performed a service, and spent time and money to acquire the sale, and the selller agreed, in writing, to pay the broker commission in a scenario where they refuse to move forward. It’s no different than stiffing anyone else you hire.

and I’m guessing it is simply never pursued in the timeshare sales industry. The banned from listing with the same agent scenario is likely the only plausible consequence if sellers back out.

Maybe if it’s rare enough that they don’t bother and just write off the loss, but each and every occurence is thousands of dollars of revenue of which some portion may be collectable.

In any case, the seller is taking a risk in defaulting on the contract. They open themselves to consequences like legal fees, court judgements, and tarnishing their credit score. That should at least discourage sellers from backing out just because they think they can get a bit of a better price. It’s a different story if the seller is underwater. Not much to discourage anything there.

 

[KAT4DISNEY]

Just a question because I am curios: Can a buyer find out if there is a loan (and the amount still due) on a listed contract before he/she sends in a deposit? (I've read several reports of deals falling through because the seller either didn't know he/she would have to pay to sell or didn't have the money to complete the sale).

I think you can find out if the seller is from overseas or if the contract is being sold because of a bankruptcy or a death. It would be nice to know if the sellers are going through a divorce, too. Those things usually mean a longer process. I wound't recommend someone new to DVC offer of those types of contracts. I'd personally still offer on those contracts (for the right contract), but I'd also be prepared to have the deal fall through.

I know that if it is financed thru Disney you can find the mortgage filing on the Orange county website. I'd imagine any other financing would show up the same but I haven't ever run across any non-Disney on any contracts I was looking at. If the mortgage is paid off you also find that filing.

 

[Wakey]

That may be the case in many, or most, situations, but not all. I had an awesome seller who returned all the paperwork the same day I did. Our contract was sent to ROFR the day after we agreed on a price, and the whole process took only 40 days to complete.
And I am yet to see a contract within $10 per point of what I paid. The sudden increase after this past summer is to blame for that.

Yes we had the same. I think from offer to making my first booking was 45 days.

 

[Littlelulu01]

A signed contract is more than enough to prove a debt for services rendered, which is all you need to hire an agency or report the debt. Notarization isn’t necessary to validate a contract (consider how many contracts all of us enter into for various services we receive and how infrequent we need to notarize)



Those are the terms though, and they aren’t unreasonable. If they didn’t like them they shouldn't have signed. The broker performed a service, and spent time and money to acquire the sale, and the selller agreed, in writing, to pay the broker commission in a scenario where they refuse to move forward. It’s no different than stiffing anyone else you hire.



Maybe if it’s rare enough that they don’t bother and just write off the loss, but each and every occurence is thousands of dollars of revenue of which some portion may be collectable.

In any case, the seller is taking a risk in defaulting on the contract. They open themselves to consequences like legal fees, court judgements, and tarnishing their credit score. That should at least discourage sellers from backing out just because they think they can get a bit of a better price. It’s a different story if the seller is underwater. Not much to discourage anything there.

Yeah, I’m not buying the brokers ability to collect a commission on a sale that doesn’t close. A real estate broker doesn’t sue or attach a lein or anything like this if a home seller backed out of a sale and they lost the commission. The buyers are the only ones who could sue for damages ie loss of the appraisal fees etc. I’m betting that if push comes to shove, a seller isn’t going to be liable to pay a timeshare commission on a deal that doesn’t close. Most of the time a sale goes through. I don’t think many folks set out to sell something that they have no intentions of actually selling. The few occasions that come to pass where the sellers back out for whatever reason, don’t warrant the hassle the brokers will need to go through to collect an unpaid commission. If money changes hands ie you sign a contract to get your timeshare sold and they charge an upfront fee, non refundable if you backed out then good luck getting it back. But if the broker doesn’t collect till the deal closes that’s different. Loss of a likely very small percentage of your commissions is part of sales. Reputable timeshare sales companies don’t require sellers fees upfront. It’s actually a red flag they warn against. If it was common for sellers to back out and brokers to collect the commission on an unsold timeshare, eventually the boilerplate sales agreements would be modified to reflect compensation due to buyers, not broker’s commission. I think the wording is there to discourage sellers from backing out of the deal.

 

[frabjous]

Yeah, I’m not buying the brokers ability to collect a commission on a sale that doesn’t close. A real estate broker doesn’t sue

Are you actually arguing that the terms of a contract don’t matter? Of course the broker is a party to the contract and can sue. Of course the broker is providing a service and can report a delinquent account.

 

[kboo]

Are you actually arguing that the terms of a contract don’t matter? Of course the broker is a party to the contract and can sue. Of course the broker is providing a service and can report a delinquent account.

Of course they CAN, but if the amount is not huge, and if the sellers are out of state, it can end upnot being worth the $to pursue.