Can I back out of a sale?

Question

We just finished our first flip the first part of October.  The day we listed it with a realtor, we got a full priced offer of 149,900, and we agreed to pay 5000$ towards closing.  We thought we could potentially get other offers that did not involve paying closing costs, but we figured a bird in the hand is worth more than two in the bush! Long story short, the buyer has a rural develpment loan.  Closing was supposed to be Oct. 30th, (30 days) and we keep getting an extension request each week.  Two appraisals were done, first being 153,000 and second 147,000.  So now we got another extension request for 2 more weeks and a reduction in price of 147,000.  We are so aggravated now, that we are tempted to back out of the contract and not sign the extension.  Can we do that?  Would we be responsible for the appraisals, and fees associated with closing? So frustrated!!!! :/

John Thedford · Answer

Unless you agreed to pay for the appraisals, that falls on the buyer. You are not contractually obligated to extensions . Before you make a decision out of aggravation: weight the pros and cons. Have you had a LOT of activicty? Any backup offers? Sometimes the one in the hand IS worth more than two in the bush:)...best of luck whatever your decision.

Jeff Rabinowitz · Answer

The title company may not have much control over the closing date. The new TRID regs require specific notices by the lender to the borrower and give the borrower time to accept or reject changes to the terms of the loan. The timeline begins when the changes, if any, that you propose are accepted.

Shannon Cannon · Answer

They said reason for 2 appraisals was that the original purchase of the property was 53,000 and selling price was 150,000-so I guess they were just trying to confirm that the renovations were done to warrent the difference in price.

Wayne Brooks · Answer

Agreed, you have to do nothing if you wish.  But curious, why 2 appraisals?

Shannon Cannon · Answer

Thank you all for the advice! I'm glad to know, at least, that we are not responsible for the appraisals and fees.  That's definitely an option to have them pay the difference in price.  Do you think it's ureasonable to put pressure on the title company and say closing must be on or before next Friday? Right now, they are giving the date of on or before 12/4 as closing.  That will be 9 1/2 weeks since contract was originally signed-5 weeks past original closing date!!!

Russell Brazil · Answer

You do not need to sign the extension, however I would consider the time of year. Is it hard to find buyers around Thanksgiving and Christmas in your market?

I would only agree to lower the price by the $2,000 if they reduce the seller subsidy by $2,000. So your not would be the same, and the loan could conform to the appraisal for the lender. If they do not agree to that, suggest that you may let the contract go into default and tie up the EMD. Im not saying to actually do that, but use that as a negotiating tool.

Charlie Fitzgerald · Answer

I'd raise the price to extend to extend the contract.  I'd also request 2% of sales price in EMD to be released upon execution of the addendum to raise price and extend contract, and it would be non-refundable.  So they, either close, or they lose it.

Jeff Rabinowitz · Answer

Anytime the closing goes beyond the date specified in your contract you can terminate the deal. Actually, it is already in default. You are being asked to extend but the choice is yours. It is the buyer who failed to perform not you.     The same applies to the price. You accepted a price of  $149,900. You have no obligation to accept the lower price. (You are being asked to accept two material changes, the extension and the price. You can accept both, neither or either one separately. You can also make your own counter to their offer.)  If the buyer really wants this house they will be able to find the extra money and bring it to close. It is only $2,900. Remember, they do have money in this deal that they will lose if the deal falls apart. They have probably paid a loan application fee, 2 appraisal fees, maybe an inspection fee. Depending on the language of your contract, you may be able to keep the earnest money if you decide not to accept the new conditions.

I agree with John. You clearly can terminate this deal but you should determine whether that is in your best interest.

Can I back out of a sale?

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