Usually it never gets this bad. Usually the buyer's attorney cites the finance contingency and there's always an extension. You could always agree to the extension after the fact if they just need a few more weeks otherwise you'd have to wait several more weeks for another buyer to come along. I'm guessing in his area, there aren't too many cash buyers around. Cash is always ideal but I'm going to say that out of the transactions I do, that's only 10-20% of them out there, most of the time it's financing. Normally you just give the money back if they make a big stink about it. What they can do is tie up the property in litigation and you can't sell a property that's in litigation. All the laws basically favor the buyer.
Buyers' failed to "close" on Monday
- Thread starter GON
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We had a deal fall through too. Apparently the wife had only a temporary or term job. When the bank found out they rescinded the "approved mortgage".
What was really awkward is the buyer never told us, they told their agent, who told our agent, who told us. But there was no formal withdrawal of the offer - which left us briefly in limbo. Anyway we sold it again for the same price a few days later.
Strangely enough that second deal fell through too (it involved a transfer by a major employer where the employee changed his mind about moving) but that didn't happen until after all the conditions had been met. So the buyer's employer paid us out and put the house right back on the market.
Anyway, I understand that in Canada the seller has the option to keep the deposit or sue for damages. Most people just keep the deposit. I don't think we even did that. We felt bad for the young couple who had really wanted to buy our house.
What was really awkward is the buyer never told us, they told their agent, who told our agent, who told us. But there was no formal withdrawal of the offer - which left us briefly in limbo. Anyway we sold it again for the same price a few days later.
Strangely enough that second deal fell through too (it involved a transfer by a major employer where the employee changed his mind about moving) but that didn't happen until after all the conditions had been met. So the buyer's employer paid us out and put the house right back on the market.
Anyway, I understand that in Canada the seller has the option to keep the deposit or sue for damages. Most people just keep the deposit. I don't think we even did that. We felt bad for the young couple who had really wanted to buy our house.
A few options come to mind.
1) Threaten to sue them for specific performance. Any reason you can't give them a few more weeks to get the paperwork done?
2) Depending on how bad you want the house gone, offer to lower the price to them.
3) Owner finance the house for a short term if you care to do that.
1) Threaten to sue them for specific performance. Any reason you can't give them a few more weeks to get the paperwork done?
2) Depending on how bad you want the house gone, offer to lower the price to them.
3) Owner finance the house for a short term if you care to do that.
Usually 3 is a bad idea if the bank refuse to finance to begin with. If you are selling a house you probably want it gone and your money elsewhere. If you don't want to sell it you should just rent it out traditionally.
1 is probably not going to work unless there's a fraud, you know things can happen and that's why you accept an offer with a deposit large enough, and sellers often accept no contingency offers or cash sales to avoid this, often at a slight discount. I've won offers over another buyer because my down payment is much larger (35% instead of 20%) at the same sale price.
2 is probably the only realistic option if you still want to sell.
Expiration of a rate lock is possible but mortgage companies are dying for volume so I'd be surprised they'd let a lock expire because they forgot to order an appraisal.
Yes and no. I had one deal where I had provided all documentation weeks before closing and UW at my bank kept asking for extensions because they were simply too busy to get it done in time. The seller was immediately angry but it worked out in my case because we needed 5 more days but it took the seller another 2-weeks to remedy the inspection issues so we ended up being pissed at him.
Yea-but I have a high volume Realtor friend (making lots of money) and volume has fallen off the face of the Earth due to mortgage rates being raised the last couple of months. Another FED hike today.
For item number 1, you usually do that if you're the buyer not the seller. Usually in the P&S, there's specific language that says that the seller's only recourse is the deposit if they don't close. You can image the nightmares that would happen if you could sue them for specific performance and the buyer doesn't have the money. If they don't qualify for a mortgage how are you supposed to get them to pay up?
For item number 2, it's meaningless if they don't qualify for a mortgage. And the leverage belongs to the seller because the buyer stands to lose their deposit. Normally you just extend the closing date and it's the buyer's attorney's job to protect the buyer's deposit which is why I'm surprised no extension was granted. Normally it's worded such that if you don't grant us the extension we withdraw the offer based on the finance contingency and demand our deposit back and you normally extend the finance contingency until you get a clear to close from the mortgage company.
Never owner finance to someone who doesn't qualify. Do you ever sell cars to people who want to pay you by the week? It's the sketchiest most desperate thing to do.
Sounds like Bank of America. Lots of people hate them for a reason. Had one deal where everything was fine no issues but they still couldn't close on time because their closing department was too busy to do the paperwork. Had to wait an extra week for no reason. Everyone was mad, the buyer, seller, agents etc. We stopped using them after that. Most banks if you get the clear to close, they can generate the paperwork the next day.
Some states use "Escrow" some use attorneys. Some states the mortgage brokers function as Escrow. Not a uniform way to process a property transaction from state to state-like one would think.
It depends on the state. Some states are attorney states where you need an attorney to close on a property and others are title company states where the title company can do the closing. I happen to be in an attorney state.
This was a small local mortgage company - the kind that closes the loan and immediately sells it to BoA or Chase or the secondary market. I've had several great experiences with these kinds of mortgage companies and I've actually never obtained a mortgage directly from a big bank. This was the one bad experience.
I would NEVER buy a house without an attorney. I've been "saved" several times by my real estate attorney either spotting issues before anyone else did or by her ability to solve issues quickly. My last house had a leaking buried oil tank that required $150K in remediation that was completed by the seller a few years before the sale. He was elderly and had paid for everything but had lost the paper trail and somehow never filled it with the town. No one wanted the house even though it was a great house and he was selling for a really great deal. It took her a few days but she was able to contact the remediation company, the landfill where it was brought, she recreate the entire paper trail, and did soil testing. We probably paid $200k less than what the house was worth because she was able to recreate the trail. When we sold the house no issues at all.
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Renting is a big headache. With owner financing you can foreclose and sell for a second profit if they stop paying. Probably lesser of a few evil options for a hard to sell property.
Well we are in an attorney so it's hard not to use an attorney but it's possible. Those people typically get burned though either as a seller or buyer. It's really bad for the buyer not to use one because around here, it's free if they're also the closing attorney as the closing attorney also sells them title insurance and I think they keep something like 70% of the title insurance premium as a commission.
You learn something new every day.
The thing with buying and selling real estate, there is a gauntlet picking your pocket every step of the way.
Scott
Not that simple, going to cost you money to do the foreclosure paperwork and it's like getting rid of a bad tenant, easy for them to trash the place and cost you 5-10k easy or more. Some standard horror stories would be the cement in the chimney or toilet/main line, or just leave the water running and have the whole house soaked. Sure the insurance might cover it, but have fun making repairs and collecting.
Yes there's lots of fees in addition to the real estate commission. That's why the closing disclosure is several pages, probably at least a dozen or more line items with various fees either for the seller or buyer.
I don't know of any states that require you to be represented by an attorney to buy a house, but they all should.
A couple of years ago we sold our temporary second residence condo. At the final signing there was literally a 1 inch thick stack of papers our realtor brought with her. Every one of those pages was turned, probably less than 35 actually looked at, and even fewer signed.
In the case of being required to have a real estate attorney, the good this is it gives you the opportunity to go after THEM if the deal somehow goes south.
Scott
My real estate attorney always looks through the packet and makes sure it says what it's supposed to and then explained it as we're signing. She's caught mistakes by the bank too.
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