Flipper/Rehabber · Littleton, CO · Member since 2014 · 75 posts · 75 votes
My buyer has backed out of contract because she wanted to expand basement (she did not mention this in contract) and it is going to cost more than she thought. She wanted to demo basement wall, dig out 500 sf of crawl space and put egress where concrete patio it. Did she think this would be cheap? The agent marked the inspection box as the reason for backing out but this was not an inspection and inspection had not been done yet. n my mind and inspection is for finding any current or potential problems with the house. Given the generous buyers rights when it comes to getting earnest money back I'm wondering if I stand a chance of keeping earnest money. It just doesn't seem right that she can get it back after I passed on other offers and she never said it was contingent on cost of remodel. Any input is greatly appreciated. Thanks in advance!
It's definitely not fair but she will likely say that it is based on other aspects that were not presented at initial showing. Sometimes you win and sometimes you lose.
In Florida, the buyer can back out any time during the inspection period for any reason - or no reason - with full return of escrow. I have found this to be the case in other states where my clients and I have invested in real estate.
As @Patricia Steiner said, in my state, an "As-Is" contract allows the buyer to walk away for any or no reason during the inspection period, while the "Standard" contract allows for the seller to remedy certain items to "working condition" and does not necessarily allow the buyer to back out scot-free.
If you aren't sure of your contract, consult your Attorney, Realtor, or title company for some direction.
It's a bummer, it's annoying, but you're better off finding a buyer that wants to go through with the purchase than worrying about battling over EMD. We deal with flaky buyers frequently, and I'd rather find out early in the process than days before closing.
I’d let it go if you want to sell your house. If you tie up the deposit then you’ll have to deal with small claims court. You can’t sell the house when this issue is unresolved. At least that’s how it is in my state. Good luck.
@Scott Lepore there are investors who put properties under contract without even looking at them, because the inspection clause is an easy out. I would drop this quickly and find the next buyer. I sympathize with your frustration, but this is a loosing battle and not worth the fight.
As many have stated it is likely just best to move on. Did the agent state the reason in writing or was the reason verbal and all that is physical is the checked box on the termination?
@Scott Lepore the inspection period and due diligence both have specific deadlines but can include many types of investigation. You don't need to hire a formal property inspector to find out an issue that makes it no longer an appealing purchase. As long as you formally withdraw within the time frame allowed by the contract you are allowed. There's no penalty to a buyer for being unrealistic about rehab costs. It's disappointing but move on... You don't have a case for keeping the EM if the contract deadlines were followed.