How to get out from this deal??

Question

I have a family member who is in a tough buying situation and I am seeking advice on their behalf.

To sum it up:

1. He put an offer in at $135,000 on a Fannie Mae home for that was listed for $125,000 and it got accepted (no surprise). He will be using this home as a primary residence.
2. After home inspection he was able to negotiate the purchase price down to $131,000 due to some issues with the property.
3. Contracts signed.
4. Now family member wants to back out of the deal because he realizes that its not a good deal and doesn't want to spend a lot of money on numerous repairs.
5. He consults RE lawyer who was recommended by RE agent. Lawyer mentions that seller can sue for "non-performance".

Questions:

1. Whats the best play to get out of this purchase?2. How much can seller sue for non-performance?  Does anyone have experience on how this works out in court?

Greg H. · Answer

This is FNMA.  Absolutely nothing beyond the loss of earnest money will be pursued. If they have passed the 10 day period and there are no title issues, FNMA will keep the EM but will pursue nothing further

Greg H. · Answer

Fannie Mae will not sue for non-performance.. The maximum consequence for backing out will be loss of earnest money

Account Closed · Answer

he can be sued by his agent for loss of commission, rare but possible

Greg H. · Answer

The commission is offered by the listing agent by agreement with the seller. I saw no mention of a buyer's representation agreement by the OP

Jeff B. · Answer

It read Fannie Mae home - - I took that to mean a Fannie May loan and apparently it is basically an REO :grin:

Greg H. · Answer

The OP's question dealt with the purchase of a FNMA property and my answer was 100%correct when Fannie Mae is the seller

Jeff B. · Answer

Right, but the Seller still can.  Non-performance can go from the loss of equity the seller was to receive on closing all the way to forcing the closure.

CAVEAT: Seek professional legal advise

PPS:  learn to perform a better due diligence!

Rob Randle · Answer

Thanks for the response as well as others in this thread.  My family member was able to back out of the contract.

Jerry W. · Answer

@Rob Randle there are hundreds of details that could make any prediction useless.  At the minimum if he cannot find a good legal shelter he will lose his earnest money or dawn payment money.  He could be sued for damages or for specific performance.  Most courts will not enforce executory contracts, but most will give monetary damages.  Is the seller hard headed enough to sue for damages?  Does the contract have a legal fee penalty for the loser?  There are many things you need to know and who the judge is could be the deciding factor.  There is also a huge factor of credibility.  Your family member may find it hard to get realtors or other professionals to work with him in the future.  Have the attorney look for a good escape clause.  Good Luck.

Wayne Brooks · Answer

Fannie isn't going to sue for specific performance, not a chance.  Fannie will simply put the houses back on the market, as they want to sell the house now. He will lose whatever EM deposit he put up though, unless 1) he is still within his inspection period, or 2) he can't get financing and the contract was contingent upon financing.

How to get out from this deal??

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