We have gone through tough negotiations on a house. The sellers have been really difficult to wanting to budge on any aspect, price, repairs etc.... This a.m. I saw another house that I like. I have a $500 deposit down on the first house. I need some advice. Buying a house is a huge deal. I would like to make the best decision for my family and my self. Please help...especially realtors!
Thank you
2007-11-12 01:48:10 · 8 answers · asked by david g 2 in Business & Finance ➔ Renting & Real Estate
the second house is new on the market
2007-11-12 01:58:07 · update #1
The law on this will vary slightly from state to state, but as you are only a few days out from closing, I will proceed on the assumption that your contracts' financing contingency period has expired. Therefore, you are very likely to be sued by the seller for breach of contract. You can be forced to purchase the house.
But, here is how you should proceed.
1. Have your agent bring you to the new house, get a disclosure, do a CMA, etc. Run a line item comparison ofn the two properties. If you truly find that you prefer the new house to the original, proceed to step two.
2. Have your agent contact the listing agent of the original house and see if there is any kind of an out: Was there another bidder on the home when you put your offer in, or do they have a back up contract in place? If they have another good prospect for purchase, they may be a little more sympathetic to your situation.
3. If there is no other buyer in line at this time, check your purchase contract. I always include a line in the special stipulations that states that in the event buyer defaults on the contract, seller agrees to accept the earnest money as total liquidated damages. This trumps any scenario in which you could be sued for additional damages. If a clause similar to this is not in your contract, you may just want to have your agent plead your case to the listing agent and the owners. They may just let you off the hook.
If you do succeed in getting out of the contract, and buy the other house you will pay:
The earnest money
A 2nd mortgage origination fee
A 2nd appraisal fee
a 2nd home inspection (and what if the inspection reveals that the house is in lousy condition?)
While your agent will probably not press the issue, you will also owe them the lost commission on the original house, in addition to what they earn on the second house.
The general rule of thumb I give to my buyers is: Once you've found the house, stop looking! There will always be homes coming on the market that you may have prefered to the one you bought, but that's the way the market works. My advice to you is to go with the one you have a contract on and make it your home.
2007-11-12 05:16:35 · answer #1 · answered by Anonymous · 1⤊ 0⤋
If you back out now you'll definitely lose your earnest money deposit, plus your lender may charge you for the initial loan commitment or document preparation since they've already prepared everything on your loan, also the title company may charge you for the title search they performed. These charges may vary depending on your state's laws, but you could be out over $1,000 if you have to pay all of these charges since you waited until so close to closing. Buying a house isn't something that you can go into non-chalantly and change your mind at the end. Switch if you'd like, but you will have to pay for your mistake. Talk to your realtor and loan officer about the charges you may incur.
2007-11-12 02:22:38 · answer #2 · answered by Anonymous · 0⤊ 0⤋
It's a difficult question, one that you would DEFINATELY want to speak with a real estate attorney on in regards to your particular contract if you do really want to get out of your contract.
You signed a legally binding contract that could hold you liable for ALL seller expenses in selling their home to the next party. It's often assumed that the only thing on the line is the Earnest Money Deposit in a real estate transaction if the buyer defaults, but that's not the case. That's the money that without a legitimate contractual out (default), you are guaranteed to lose easily. The seller can (and probably will) seek more damages up to specific performance (forcing you to go through with the sale) or the full purchase price of the home (not to mention that the real estate companies involved could sue for commissions).
Ideally you have a REALTOR working as your Buyer Broker in this situation whom will guide you through this and point out potential outs in the contract. If you close in 5 days however, chances are the only ways out are via financing falling through not on your own account or walk through covered repairs (neither is very likely). Walk through covered repairs (this is regionally and contractually different so yours could be completely different, again hopefully you have a Buyer Broker to help) are major systems (plumbing, electrical, HVAC) that are broken and in need of repairs and substantial changes in the property (i.e. a tree coming through the roof or such). In our area the seller is "on the hook" for, typically it can change contract to contract, for 1% of the sales price (meaning they HAVE TO contractually repair up to 1%, after that it's negotiable, which if you insisted on them paying for all and they refused would give you your out. This is all VERY unlikely however.)
The safest thing to do is to go through with the transaction. Otherwise, speak with a real estate attorney before proceeding. Good luck.
2007-11-12 02:27:30 · answer #3 · answered by DP1980 2 · 1⤊ 0⤋
In addition to the broker/agent wanting his commission, the seller may be able to sue you for specific performance.
Your contract probably says I'll buy your house if I can get a loan and if the building inspection is ok. It doesn't say anything about you finding a house you like better.
2007-11-12 06:28:36 · answer #4 · answered by Debdeb 7 · 0⤊ 0⤋
Once you sign the purchase agreement, unless there are anything contingent, such as not being able to obtain a mortgage, you are bound to the agreement. If you back out, the broker can take you to court(and probably will) and sue you for the sales commission, which in many cases is 6-7%
2007-11-12 01:58:06 · answer #5 · answered by jebfowler 2 · 1⤊ 0⤋
you'll probably lose your $500 deposit, plus you'll owe closing fees like bank appraisal and title search, possibly other penalties for cancelling deal -ask your realtor
2007-11-12 03:15:10 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Go with the sure thing.
2007-11-12 01:51:07 · answer #7 · answered by Anonymous · 0⤊ 0⤋
should have shopped around mode before you selected this one.
Good luck
2007-11-12 01:56:13 · answer #8 · answered by Jan Luv 7 · 0⤊ 1⤋