Deposit Protocol -- What Would You Do?
 

OK, so here is the scenario.

I listed one of my cars (a non-Pontiac :)) for sale about 3 weeks ago in Hemmings. I put a link in the ad to a thorough/detailed 3+ page write up of the car, along with about 30 high resolution pictures covering every aspect of it.

The first guy that called on the ad wanted the car very badly, but he was 2500 miles away. So he wanted to put a deposit on the car to hold it until he could have someone look at the car in person for him (understandably). We agreed on a price and a deposit of $500. He asked before sending the deposit if it would be refundable, and I agreed that I would refund his deposit “if his inspector found the car to be not in the condition I had described it.”

It took him about 10 days to find someone to inspect the car (a professional appraiser) and to get him out to my house to look at it. When the appraiser sent the buyer the report, it basically said that the car was as I had described it, but that he felt I had overpriced it (based on NADA guide, slow economy, downturn in collector car market, etc.). So the buyer decided he no longer wanted to purchase the car, and he wants his deposit back because we agreed it would be “refundable”.

In those 10 days, I probably had 10 people call on the car, and I told them all I had a deposit/pending sale on it. So they were short calls. Would it have sold…? Who knows.

As to the refundability, I will probably send him his money back, even though his reason for backing out does not meet the stipulation I originally placed on the deposit. The whole way he and his “appraiser” have approached it (too long to get into here…) has really angered me, or I probably wouldn’t even be having second thoughts about this.

Wondering what other folks would do in the same situation?

That appraiser had no business dicussing the value of the car. He was there only to check the condition and reply on that. It sounds like you did not misrepresent the car. He called you on that price and was willing to pay that price. In my opinion that $500.00 is yours if he does not want to follow through with the transaction.

The guy agreed on the price and the car was as described. It is not your fault he changed his mind on the price and you lost ten days, keep the deposit.

Perry

An inspector, in my opinion, is different from an appraiser. Your potential buyer sent someone out to be sure the car is as you described it. The inspector agreed that is was. He really doesn't have any business commenting that he feels that your asking price is too high. Price negotiation is between the buyer and seller.

When I had my house inspected when it was on the market @ 2 years ago, the inspector never noted anything about my asking price. That's what the appraiser is for.

In my opinion, you do not owe him his deposit back.

The car met the description per his own inspector. The price was agreed upon before the inspection. The inspector was to validate the car versus the description, not to appraise its value as that had already been agreed upon. You have every right to KEEP 100% of the down payment. I would make sure that he understands this, then I would give him the money back and put this behind me. Next time make sure that the deposit is NON REFUNDABLE. Otherwise this may become way more hassle than its worth and to me that would not be worth the $500.00.

I agree with Norwood for the most part. I, however, would probably keep a couple hundred bucks just to make a statement and/or prove my point.

Good luck- let us know how things work out.

db

Yes that is the way to go, Keep a couple of hundred and take the wife out for a nice dinner and maybe a show.

I would send his money back only because you didn't give him a time limit for having the car inspected.
We always learn what to do the next time. Too bad we can't think of all the bases we need to cover beforehand.

This is exactly how I feel about the situation. I'd explain to him that the car was found to be as you described it, therefore he needs to honor the negotiated price or forfeit the deposit.

It could very well be that part of the contract agreement for services between the potential buyer and the appraiser includes his assessment of value. Not your problem.

Tell him you want a copy of the appraisal, re list the car, and hold his deposit until you sell it. You never said the refund would be promptly returned did you?

I would have to say if you agreed to refund the deposit,
then just write it off as a lesson learned.
I always keep at least half of any deposit if it is over $500.00.
I do agree 100% with CR hold his deposit until you resell.
Explain to him you will refund but not until it sells.
If he asked why tell him because of his backing out has lost you a few potential sales.

as CR said, the appraiser had every right to opine on value if that what the buyer paid him to do, that's between buyer & appraiser. your deal with buyer seems very clear & you have every right to keep deposit & i would.

buyer knew the deal he was making & is simply asking you to refund since there's no harm in asking, the worst you can do is say no. buyer got cold feet, wants you to be the nice guy.

thing is you turned away MANY potential buyers. the buyer asked you to take the car OFF the market for 10 days for the consideration of $500 while he did his due diligence. you met your end of the bargain, he should meet his.

lesson learned on his part should be to send appraiser BEFORE making deposit, why should you pay for his lesson.

ask yourself this, had he NOT made the deposit, paid his appraiser to go out & appraise first, car winds up being sold, do you think appraiser would refund his fee ? or, better case, car winds up being appraised for less then he expected, asks appraiser to refund fee becuase it wasn't worth what you were asking, should appraiser refund ?

heck no, surely the the buyer would ask for it back, no doubt.

i say keep it.

You have to remember Keith said the buyer wanted to send down an inspector to inspect on the condition of the vehicle NOT AN APPRAISER. I do home inspections for a living and I always have clients asking about the price. Is it too high. Would you buy this house. We have rules to abide by. I can not comment on certain things. Those are between the buyer and seller. I'm hired to report on condition of item at time of inspection, Nothing more.
They would be alot of PO'd agents and sellers if someone backed out of a deal because an inspector who should'nt have commented did.
This situation is no different.

Again. The inspector the buyer sent at his cost happened to be an appraiser. Did the seller stipulate what the pedigree of the inspector had to be?


While I understand you have rules to follow. A property inspector
and an appraiser are not the same thing.

Originally Posted by Pearlbluebird
You have to remember Keith said the buyer wanted to send down an inspector to inspect on the condition of the vehicle NOT AN APPRAISER.

good point, thats TWO things the buyer f'ed up on AND he still wants keith to bend over.

hey keith, i'd like to send out a mechanic to look at the engine. i'm sure you won't mind if i pay a bodyman to show up instead.....;)

While you would be "right" to keep the deposit it just may not be worth the headaches, just mark it down as a lesson learned. Have him sign off as paid in full so he doesn't come back expecting you to pay the inspectors fees also.

Next time you have other interested buyers call after a deposit is made, get their phone # and tell them you'll call them back if the buyer isn't serious.
If the truth was know the guy's wife probably found out what he was up to causing his sudden change of heart. :wife: ::fencing: :wife: :boxing: :wife:

If you know the inspectors business name you should post it in the business exchange so everyone here knows who not to hire in the future, he's definately not a professional.

Guys, thanks for the input. Clearly some different points of view, which helps me understand why I have my own mixed emotions on this (and thus put this post out here).

On the point of inspector vs. appraiser, I did get a copy of the appraiser's complete report, and it noted that one of the elements of the "services to be provided" (in addition to evaluating the condition of the car) was to make a judgment on "Is this vehicle priced right"?. This was not made clear to me before he arrived to look at the car, but was pretty obvious once he arrived. Almost seemed like he was trying to talk me down on the price while he inspected the car, which I considered "out of bounds". I almost got the feeling he was thinking he'd get a cut of anything he might save his customer... that's how blatant it was.