My wife is a realtor. She’s got 2 deals this week where the agent and buyers of property she was selling have lost their deposit. We are talking like 15K. Basically in both instances the buyer missed the mortgage commitment date and did not file an extension by the due date.

Good grief people. A P&S is a contract. Generally your deposit is covered if you don’t get financing. But you have to request extension or back out before commitment dates.

All I can say is have your financing in order and make damn sure your agent takes date’s seriously.

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Interesting. Who gets the money?

quote:

Originally posted by ZSMICHAEL:
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Interesting. Who gets the money?

The seller gets the money. Lots of times the seller may extend even if the extension wasn’t requested in time. But in these 2 cases the sellers had good reason to say no. It’s a risk that totally could have been avoided.

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Ok sorry for the questions. Is that Earnest Money we are talking about?

quote:

Originally posted by ZSMICHAEL:
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Ok sorry for the questions. Is that Earnest Money we are talking about?

Yes basically. In Massachusetts at least, offer is made for property with a small deposit. Like $1K. Usually that’s very refundable before purchase and sale is signed. Purchase and sale is signed with a much larger deposit (around 15K in both of these cases). There are commitment dates that must be met. Mortgage commitment has a due date as that ensures the closing date will happen. But if the buyer can’t get mortgage commitment (usually some snag on paperwork/documentation) they need to request an extension. If seller denies extension they refund deposit and the deal is cancelled. But the buyer can’t hold the seller in limbo without any idea if the deal is gonna close on time.

These are examples of why, when I bought our home, after studying my backside off so I truly understood every last little thing about the process, I hired a competent real estate attorney to oversee the entire process from my end.

He charged me $250, IIRC. I regarded it as cheap insurance for the most costly purchase I expected I'd ever make.

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Thank you.

Yeah these folks both had buyers agents. My wife literally sent them numerous messages and made tons of calls sayin mortgage commitment was due and if they needed extensions to send them. She even warned them the sellers weren’t inclined to extend.

It just should not have happened. The language in the contract is very clear. Buyers didn’t need any professional to explain it. Oh and we are an attorney state so the buyers had attorneys also working on it.

Great that the sellers were compensated for the issues and costs to them. But man I can’t imagine throwing away $15K.

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But man I can’t imagine throwing away $15K.

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Well there is always Crypto, Bitcoin and the stock market. I live in the vicinity of casinos. It is simply amazing how much money people lose.

My wife's a Realtor too and had one recently.
The buyers agent really wasn't on top of things and if I were the buyer I'd be pissed.

I think we're in for a bumpy ride with the rates still rising so quickly and sales seem to have slowed a bunch here.
If the deal takes too long to close sometimes the rate isn't locked in long enough and that results in a much higher payment that the buyer can't afford.
When you put it back on the market in that case the seller is at a disadvantage because new buyers have to factor that in and buy-downs of the rate are starting to come back. That's effectively a lower price to the seller that pays them and 15 grand isn't unusual, depending on the rate change and amount financed.

We made an offer on a house where the seller just disappeared into thin air. He was even there when we went to see the house, seemed like a normal guy. About a week after making the offer, the listing agent said he could not find the seller. I found it a little hard to believe, but my realtor and I went over there again and the place had been abandoned. The pool was starting to turn green. We went back a month later and the county had come in a put a cover over the pool to prevent mosquitos and West Nile Virus. It was nuts. The place eventually went to sheriff's sale on the courthouse steps. Seller really disappeared.

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Strange. My wife had a seller die before closing. That was a clusterfuck.

I had my financing lined up before we made an offer on the house that we closed escrow on Jan 3.

I contacted a real estate lawyer because I wanted them to look over the contract. But after the initial discussion, it's a standardized contract and he can only bring value if there's a non-standard clause.

I've read contracts before as part of my work and I've been exposed to project management so I wasn't afraid to tackle those issues. I did spend money on a home inspection for $500 and it was money I considered well-worth spending. I got a list of discrepancies that I could work on.

When we presented the discrepancies to the buyer, they refused to do anything so that we could back out and get our earnest money back. But we continued because we think the seller agreed to a way lower price at the time and it's still lower than what I expect when the downturn comes in. Also, the wife liked the kitchen and bathrooms.

quote:

Originally posted by ZSMICHAEL:
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Interesting. Who gets the money?

Seller. Here’s how I think about residential real estate contracts (YMMV, but they’re usually more similar than different):

Buyer signs a contract to buy a house. Seller can’t really force Buyer to close, especially if Buyer can’t get financing, so Seller’s only real recourse if Buyer doesn’t close is the deposit (or earnest money deposit).

That doesn’t mean Buyer forfeits his deposit if he doesn’t close for any reason though - the contract will give Buyer the option to terminate the contract and keep his deposit for a number of reasons. These are called contingencies, and inspection and financing are two very common ones.

However, the contingencies will have an expiration date after which Buyer cannot use them to get his deposit back. For example, if the financing contingency expires on January 5 and buyer doesn’t terminate the contract before that date, if he is unable to close due to lack of financing Seller gets to keep his deposit.

quote:

Originally posted by frayedends:
Basically in both instances the buyer missed the mortgage commitment date and did not file an extension by the due date.

You snooze, you lose.

Plain stupidity.

On another forum, and I can’t remember the exact number………it was like 33%-40% of buyers were backing out of new home builds or “new construction”. The number may have been higher as I can’t recall the exact %. That was Q2 and Q3 of last year and he was in the business.

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Interesting. My wife does a lot of new construction working for 1 builder in particular. She hasn’t had anyone back out. At least not after P&S. But her builder finishes new builds in under 2 months, so mortgage rates/locks aren’t usually an issue. Most builders take much longer.

The deals I mentioned in the OP were not new construction.

We had a buyer put $2500 down and then back out when their financing fell through. We got to keep the $2500, but it just basically paid for that months mortgage payment since the home was tied up for 45 days off the market.

We had a buyer pull a no-call no-show on the P&S date for the house I grew up in that just sold. Then the buyer tried fighting for the deposit back "are you really going to keep it?" Yeah, you cost us almost $15k from the next highest bid. Asshole.


On a side note frayed, if your wife needs a Realtor referral buddy in the Boston area let me know, I'd love to help out.

More indications IMO that the housing market is imploding due to interest rates and other economic factors.

My brother in law is renting and biding his time to buy a house, I keep telling him to wait a year or two longer and he’ll have sellers begging him to buy their houses.