Thought it wise to solicit some advice from those with much more experience and background in real estate than myself. I am selling my house, and the buyer has decided to back out of the deal two days before closing.
They are stating the reason to be that they cannot obtain financing for the original agreed purchase price because the appraisal came in low. Now I know this essentially grounds to allow the buyer to back out. However, the buyer had agreed to continue with the purchase after I agreed to lower the purchase price to meet the appraisal amount which they had a loan commitment for. A couple days after this agreement (2 days before closing), the buyer decided they no longer wanted to continue with the deal even at the newly agreed upon price and did not sign for the new price.
Originally they were signing the release for earnest money, but are now deciding to fight to keep this as well. The EM is $6K. Do I have any recourse here, or should I just let it be and move on?
We don’t know the exact terms of your contract regarding the financing contingency, they vary. Also, did the buyer actually sign an addendum lowering the price, or was it just verbal? The financing contingency language is the key. Sometimes it is referenced in more than one spot in the contract.
Also local custom will play a part here. In my market if the buyer does not release the contract on the property, it can not be sold. So when there is an em dispute, the buyer will refuse to release the contract so the house sits in limbo. I dont believe this is common outside of MD/DC however.
I cut and paste some of the things from the contract - hope this helps with understanding the language.
To answer the other question, the buyer verbally agreed to continue the sale at the appraised value which he was approved for, which was $244K
If there is no other language regarding the financing contingency And they did not give you a notice of termination by 5/18, or get a signed extension, then they lose their EM. Actually getting it though is a different story.
In our jurisdiction, an EM dispute does not prevent you from selling the property to someone and closing, your state may be different.
What does your agent say?
Looks like our lawyers had talked and had a signed extension through closing date (today). Verbal agreement to continue sale at lower price happened Monday, decision to back out of deal happened Wednesday.
Agent and attorney think that we have an argument in court to maintain the EM based on what has happened. I don't want to go to court, but I don't think the buyers do either.
An extension for the loan approval or an extension for the closing date? If just for the closing date with no mention of loan approval deadline, then yeah, seems like it's yours. If the extension was for the loan approval, through today, and they notified you 2 days ago, then the EM is theirs, no question about it.
You didn’t tell us what state you are in
For me where I am I would mess around and possibly cloud the title to possibly get 6k
Actually very similar thing happened to me on not one but TWO properties in just the past 2 weeks. I am saying f it you can have the EM back
Meant to say I would NOT mess around for a possible 6k
BTW anyone know how to edit posts on the BP app?
Thanks everyone for the input! I am in Massachusetts by the way. It does appear that until the buyers sign to release, the property cannot be relisted or sold.
The extension was for the loan approval @ Wayne Brooks, so what you're saying is probably right.
What I am getting is that this is kind of a sh*tty situation, but that's the way these agreements and contingencies work unfortunately.
I'll talk more with my attorney and agent and post how this ends up panning out.