Real estate question

[TroyF]

Selling a house. Buyer signs contract (cash deal) and today is the home inspection. Before the home inspection happens, they decide they don't want the house. Real estate agent tells me there is nothing I can do. I don't get their earnest money, I just have to walk away.

Is this accurate?

[Chief Rum]

Originally Posted by TroyF

Selling a house. Buyer signs contract (cash deal) and today is the home inspection. Before the home inspection happens, they decide they don't want the house. Real estate agent tells me there is nothing I can do. I don't get their earnest money, I just have to walk away.

Is this accurate?

Usually those contracts contain stipulations that certain requirements must be made before the sale is final, such as completing the home inspection and all. Kinda like taking a physical after a trade in sports. Fail the physical, trade is null and void.

I don't know enough to know what your rights are, though, if you lost money on it as a result (such as turning down other bids that are now no longer available, or any costs you might have incurred selling to this particular buyer).

[TroyF]

House didn't fail the inspection. The inspection never took place. They just decided they didn't want it.

[MrBug708]

Im guessing if your agent is sure they can keep the money, it sounds like there was a contingency in there to benefit the buyer.

[Chief Rum]

Originally Posted by TroyF

House didn't fail the inspection. The inspection never took place. They just decided they didn't want it.

Sorry, the trade thing is a bad analogy perhaps. My point is that, until all the little stuff is done, nothing is final. They can always walk away if there are conditions allowing them to. Escrow always has numerous steps and they always need to be complete before any sale is final, even after the contract is signed. Until everything is set in place and done, nothing is done, you know?

[JonInMiddleGA]

I believe there are also laws governing the fine details (like earnest money) that vary from state to state.

[CU Tiger]

Not every real estate purchase contract is the same. Your state almost assuredly has a contract structure that must be adhered to but you can always add personal expansions.

Sounds almost like you were dealing with a wholesaler who couldnt find a buyer.

[JonInMiddleGA]

I will say that I'd do a little research on either the contract or the applicable state laws. Wouldn't be the first time an agent played fast & loose with what the rules really are (been there, done that).

[Blackadar]

Originally Posted by TroyF

Selling a house. Buyer signs contract (cash deal) and today is the home inspection. Before the home inspection happens, they decide they don't want the house. Real estate agent tells me there is nothing I can do. I don't get their earnest money, I just have to walk away.

Is this accurate?

What does your contract say? Did they put up earnest money? How long between the offer and the time they walked away (some states have a "grace period")? Whose real estate agent is telling you this? What is their rationale? What state are you in?

Without knowing all of that there's no way for us to tell if that's correct. However, in every state I've purchased real estate in, that scenario would result in a forfeit of the earnest money and/or due dilligence money (depending on the state). Generally you don't get to sign a contract on a house and walk away with no penalty unless it fails the inspection.

Also, if this is your agent and they advised you to sign a contract that allows the buyers to walk away scott-free outside some legal grace period, I would immediately fire that agent.

[flere-imsaho]

As folks have said, contracts can be varied and state laws can be varied. If you have a copy of the contract, look at the fine print - some language regarding earnest money and when it becomes forfeit is probably in there.

When we were looking to buy last year we had to withdraw on a contract and negotiated to forfeit 1/2 of our earnest money to the buyer (which was nice of them, and also it wasn't a lot of money). But I will tell you that the contract in question was clearly designed to be written regarding earnest money many different ways (I would assume based on specific situations). So I would imagine there's variety in these situations.

[CU Tiger]

Originally Posted by Blackadar

What does your contract say? Did they put up earnest money? How long between the offer and the time they walked away (some states have a "grace period")? Whose real estate agent is telling you this? What is their rationale? What state are you in?

Without knowing all of that there's no way for us to tell if that's correct. However, in every state I've purchased real estate in, that scenario would result in a forfeit of the earnest money and/or due dilligence money (depending on the state). Generally you don't get to sign a contract on a house and walk away with no penalty unless it fails the inspection.

Also, if this is your agent and they advised you to sign a contract that allows the buyers to walk away scott-free outside some legal grace period, I would immediately fire that agent.

Sounds almost like no agents involved, cash sale.

Ive talked about it on this board before but I own a few rentals and have also fix and flipped a few homes in the last couple years.

Ive bought a couple from a wholesaler..he finds off market homes (Think I buy ugly houses and other avenues) gets them under a contract and then assigns the contract to "his purchasing agent" I.E. an investor.

Ive read his contract it includes out clauses for all kinds of things including cancellation if financing can not be obtained (We its a cash deal. Since no one is applying for financing it will not be obtained.) and "cancellation for convenience" simply says in legal jargon that the contract can be cancelled by the buyer if the buyer decides it would be more convenient not to purchase.

Definitely worth reviewing the contract but it is very possible that there was a poison pill clause.

[JonInMiddleGA]

Originally Posted by CU Tiger

Sounds almost like no agents involved, cash sale.

Y'know, I actually had to go back & read the o.p. to catch that possibility. I just assumed that the phrase "Real estate agent tells me" meant "MY Real estate agent tells me" ... but that's actually a leap on my part, one that maybe can't be taken.

[henry296]

I know North Carolina is very buyer friendly as it comes to exiting the contract. When we sold a couple of years ago, we were very worried about it because we already had the contract on our new home.

[Flasch186]

In NE FL the buyer has to do the inspection but then can cancel if theyre not satisfied with the results within the inspection period.

[Blackadar]

Originally Posted by henry296

I know North Carolina is very buyer friendly as it comes to exiting the contract. When we sold a couple of years ago, we were very worried about it because we already had the contract on our new home.

It seemed fair to both sides when I recently sold my house in North Carolina. The buyer had to put down both due diligence and earnest money on the house. The DD money was mine regardless of the inspection. If they backed out for any reason, I kept that money. The earnest money was contingent upon the inspection and any repairs. That seemed about right but maybe you had a different agent or company.

Originally Posted by Flasch186

In NE FL the buyer has to do the inspection but then can cancel if theyre not satisfied with the results within the inspection period.

I know you're an agent and I'm sure that's the most common scenario, but it's not always the case. When I bought my house in FL in June, there were no contingencies on my offer (which is how I won the bidding on the home). As a buyer, my only recourse was to walk way from the $3k in contingency money. The only way I could get that dough back is if it didn't appraise. I figured that would cover me if there was a Chinese Drywall problem or the roof was about to collapse - I'd give that to the appraiser, that would impact the price of the home and then I'd be out of the deal scott-free. But beyond that, they were going to be able to keep that $3,000 whether I executed the contract or not.

[Flasch186]

Originally Posted by Blackadar

I know you're an agent and I'm sure that's the most common scenario, but it's not always the case. When I bought my house in FL in June, there were no contingencies on my offer (which is how I won the bidding on the home). As a buyer, my only recourse was to walk way from the $3k in contingency money. The only way I could get that dough back is if it didn't appraise. I figured that would cover me if there was a Chinese Drywall problem or the roof was about to collapse - I'd give that to the appraiser, that would impact the price of the home and then I'd be out of the deal scott-free. But beyond that, they were going to be able to keep that $3,000 whether I executed the contract or not.

Im only describing the NEFAR RE contract and its boiler plate standards. Any changes arent considered in my description. In that boiler plate, you have 10 days to inspect and cancel if unsatisfied and you have to provide the seller with the inspection and receipt.