Buyer default after extension — enforce EMD or keep waiting?

Question

Cleveland

I listed a property recently that got about 20 showings in the first week but only 1 offer (layout isn’t the strongest). Went under contract with a relatively small non-refundable earnest deposit and a short closing timeline. It’s been 55 days it went from 25 day close to 55 and counting

The buyer missed the original closing date, asked for an extension, and I agreed. The new closing date has also now passed with no closing. Buyer still only has conditional loan approval, and I later found out they withheld a material fact that impacted their financing. They’re offering just a token increase to the deposit, and my realtor is encouraging me to give them more time since there weren’t multiple offers.

My concerns:

• Contract has technically expired after extension.
• Deposit is small and currently stuck in escrow.
• Buyer hasn’t been transparent about their situation.
• I don’t want to lose more time off-market, but I also know the layout limits buyer pool.
• I could, in theory, always draft a retroactive extension if they really got their financing together later.

Question for the community:

If you were in my shoes, would you enforce the contract and re-list now, or grant one final, short extension but only with a substantial non-refundable deposit?

Jonathan Taylor Smith · Answer

@Michael Gonzales - This "buyer" is telling you their own opinion of how likely they are to be able to actually close by the size of their deposit offered. Require a deposit that at minimum matches your monthly holding cost for the property and make it payable directly to YOU (not escrow). If they are unwilling to put up some real money - they are telling you all that you need to know - so then relist it!

Stuart Udis · Answer

@Michael Gonzales Have you received clarity on what's delaying the loan approval? You mention there was a material fact withheld, care to expand? I believe its first important to determine if its the real estate that's the problem or possibly even contributing or solely the buyer. Since you shared there were 20 showings and only 1 offer, that tells me the real estate may be part of the problem. You mention layout issues, but do the layout issues impact rent roll projections or existing rent roll? My suggestion is to first gain clarity on exactly what's going on with the loan approval process.

There's a lot of Monday morning quarterbacking going on here but the fact of the matter is you were not negotiating from a place of strength given the lack of written offer interest you received, and deposits are often small on transactions such as this. Rarely do buyers in this context release money directly to the seller.   Even "non refundable" deposits are often refundable because the title company or broker holding the money look for a mutual sign off before releasing those funds and many boiler plate agreements which are often used in these types of transactions have mediation requirements. Basically, forcing you to spend money to get your money back assuming the seller doesn't agree to the release. Most sellers under contract know they can use this as leverage to negotiate partial releases or full releases allowing the property to go back to market. Going back to market also carries with it negative listing history that will have to be explained. Perhaps it is the buyer that was the problem, any new prospects will question if its the property that was the issue

I don't believe you made any bad moves thus far given the circumstances and lack of interest the property generated. Find out what it takes to get the deal closed and even if there are some concessions needed to make the deal work, based on the information available, it may make most sense to consider.

Samuel Diouf · Answer

Hey Michael, if you want to stay in contract.. I would have the buyers deposit a larger earnest money amount and have the entire amount be deposited directly to you... before you make this agreement, I would have your agent call the lenders and see what the actual situation is.

Make sure the addendum includes that the EMD is nonrefundable.

Matthew Thornton · Answer

Lean on your Realtor for advice. Realtor doesn't get paid until you get paid..

Remington Lyman · Answer

I would ask your lender to talk to the Realtor and figure out how sure their lending is. You do not want to restart the process if it looks like it will close. I would push to see if they will do non refundable emd, wired to you immediately

Lateefah Mathews · Answer

@Michael Gonzales Welcome to BP and sorry to hear about this situation. Honestly, you are under no obligation to extend this contract any further. The buyer is already in breach, and you are not required to keep granting more time.

Also, your EMD should’ve been negotiated stronger up front, but at this point it should at least be non-refundable if they’re dragging. In Georgia, we have a seven-day unilateral extension. I’m not sure about Ohio, but most state contracts are designed to limit extensions for a reason.

In truth, this is highly concerning and a red flag for sure. The conditional approval is still not cleared after almost two months, a small EMD, and to top it off, withholding material facts. That combination almost always means the buyer cannot perform. They’ve shown you on every front that they don’t have their ducks in a row.

The reality is that after 55 days off-market, that’s pure opportunity cost. One extension is already above and beyond, but every additional day risks missing out on qualified buyers. Every week brings new eyes to your listing, so tying it up longer is a disservice to yourself.

If it were my client, I would move on. I would not advise my sellers to sit idle under expired, weak terms when they could be back on market securing a buyer who’s truly ready to close.

Jimmy Lieu · Answer

That’s a tough spot but honestly if the buyer has already missed two deadlines and wasn’t upfront about their financing, that’s a big red flag and you’re taking on all the risk by waiting around. At this point your contract has expired, which gives you the right to walk away and re-list, and I’d only consider any further extension if they put up a much larger, non-refundable deposit so you’re compensated for the time lost. Sometimes it’s better to cut bait and put it back on the market rather than letting a weak buyer drag things out and tie up your property. In situations like this I always think about opportunity cost—while waiting you’re missing out on other serious buyers, and in a strong job growth market like Columbus, Ohio for example, properties still move because demand is there. Protecting your time and your deal is key, so I’d either enforce and re-list or only extend with meaningful skin in the game from the buyer. Happy to connect and answer any questions you have!

Joseph Tadres · Answer

Hey Michael,

Sorry to hear what you're going through. I would terminate the contract if the buyer can not put up more EMD. I might terminate either way because it sounds like they dont have the money. Did he do a professional inspection? This would indicate if they are serious.

Buyer default after extension — enforce EMD or keep waiting?

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