Falling Through at the Table

Even Solid-Looking Deals Can Collapse at Closing

Dan and Chris Fisher had a buyer lined up for their condominium, but things didn't go as planned. (Family Photo)

Ah, summer. The time for beach vacations, piña coladas and suntan lotion. And for home buyers and sellers, a period of much nail-biting and hand-wringing, the start of that most stressful of times: closing season.

Every spring brings an uptick in the number of contracts signed between buyer and seller. Now, with lawyers, inspectors and appraisers in tow, both sides must head to the settlement table and collect the rewards of their house-hunting or curb-appeal-enhancing efforts.

But as any veteran real estate agent can attest, even the most solid-looking of transactions can crumble like plaster. And the stakes are rising for home sellers, who in a cooling market face the possibility of selling for less if they have to put their homes back on the market after a closing gone bad.

Here are a few tales from the settlement table, one of the most high-stakes, annoying, humorous, stress-filled, intimidating, blissful and frightening places in the real estate universe.

Brett West, 36, saw no sign that things were about to go terribly wrong as he drove to Baltimore on a balmy summer day two years ago. He was about to close on a single-family house there, which he planned to renovate with proceeds from the Dupont Circle condominium he had just sold.

But disturbing news awaited him at the settlement table: The seller owed $210,000 to the Internal Revenue Service, $12,000 to the State of Maryland and $8,000 to a contractor. The liens against the property were well above the $140,000 West had agreed to pay for the house.

"I wasn't even outraged. I was just numb," he said, recalling the last-minute phone calls to the IRS that day. "I was sitting at the settlement table . . . and thinking, you know, 'I don't have a place to live in two weeks.' "

West saw no point in suing. He collected his deposit and walked away. The house went into foreclosure shortly afterward, and West eventually purchased a house in College Park -- a process he says he micromanaged.

He blames the settlement lawyer and his real estate agent for not having caught the problem earlier. "Boy, did I get burned," said West, now a vice president of Live Wire Media Relations LLC in Alexandria, whose clients include companies in the real estate industry.

Because one house sale is often tied to another -- buyers must sell their current home to get the money to purchase their next one -- a problem in one transaction can send a domino wave of horror to unsuspecting others.

There were so many moving parts to Dan and Chris Fisher's real estate ordeal that in retrospect, something was bound to go wrong. They were selling their condo in Rockville, buying a place in Tampa, finding a renter for that house and moving to Italy, during what proved to be a turning point in the local real estate market last fall.

It started off splendidly. Their two-bedroom condo went on the market on a Saturday in late September. Several buyers immediately expressed interest. By Monday, Dan Fisher, a naval officer, was meeting with a real estate agent whose buyers were offering $3,100 above the asking price to ensure the condo would be theirs.