It is very rare because the buyer's deposit would be at risk if they default after removing contingencies so they have no leverage as James pointed out. The only legitimate reason I can think of is if some new material fact was discovered after removing contingencies - otherwise doesn't make a lot of sense.
Lance King/Owner-Managing Broker
You really do not have much leverage as if you back out you lose your down payment and be subject to being sued.
It's called buyers remorse. Every agent for the buyer deals with it and advises the buyer such action will not produce the results they seek. The remorseful buyer who want to renegotiate is reminded of the great attributes of the home, the rationale for the purchase, the motivation the buyer expressed regarding their relocation, and the buyer responds appropriately.
On rare occasions, the buyer was influenced by uncle barney who guaranteed HE could buy the property for $35,000 less! A significant, Non-refundable escrow is the best barney baloney cure.
This all falls into the range of consulting with a highly experienced real estate attorney. Your agent and broker should have a good enough understanding of this to explain it to you. If you are dissatisfied, find a good real estate attorney who practices here in Silicon Valley. Keep in mind this is California law. Answers from practitioners in other states are likely not applicable here.
Mark Burns, Realtor
Coldwell Banker Elite - Top 2% Worldwide
President - PRDS, Contracts and Forms for Silicon Valley Residential Real Estate 2008-2012
DRE# 00896552 Licensed since 1985
Over 600 Homes Sold in Silicon Valley
A general rule of thumb is anything can happen in a real estate transaction. That being said it is not common that the request comes in, and even less that is is successful. The buyer has a right to ask for anything at any time, and the seller has a right to say yes or no at any time, however after the removal of contingencies if the seller has no incentive to say yes it often does not happen. If there is an incentive, I have seen it happen. So, if the seller did not reveal a material fact, something that is important that affects the value, then they have been known to renegotiate rather than face potential legal problems. If there is a precipitous change in the value of the house, and a buyer backing out would be more costly than changing the price I have seen it happen. When you ask if it is ethical, I think that is harder question to answer. Is it ethical for a seller to conceal something important? Is it unethical to say the house has lot 10% in value since I made the offer and you only hold a 3% deposit so renegotiate or you will lose 7%? Is it ethical to say I do not want to pay what I said I would so help me out? It depends on the circumstance?
If you're the buyer, don't do it. If you're the seller, consult with your Realtor and, if appropriate, your lawyer.
Hope that helps.
After contingencies are released, it would need to be extenuating circumstances for me to recommend a buying client attempt a re-negotiation of price. One example would be new knowledge of a physical issue with the home that did not exist before the release but occurred before close.
Once I had a client release contingencies and the a week later, seismic activity created a large crack in the chimney, noticed by the seller and disclosed. A repair was negotiated. Another time I had a water heater bust two days before closing and the seller did not want to repair (bank owned property), so they simply credited the buyer cash toward closing. This delayed the closing but it was easier than re-negotiating the price, and sending the loan back through underwriting.
I can imagine that a buyer might want to re-negotiate a price if a comparable property closed and disclosed a lower price than expected impacting neighborhood values. To that I would say; tough.
Renegotiating price after contingencies are released is rare and typically associated with a new disclosure (repair) type items. Ethical? If a buyer is trying to bully you on price, simply evaluate what it is worth to you. The options of pursuing the buyer's good faith deposit if you say no and they cancel can cost time (house off market) and money (off market and potential legal services). Releasing the buyer and going back on the market, can potentially produce a lower price second time around (especially if it is a repair related item).
The risks have to be weighed with your agent that knows and understands your specific situation. If you believe it could involve a potential breach of contract, it is always best to consult with a real estate attorney before deciding what to do.
At your service,
CDPE- Certified Distressed Property Expert
Hard to answer without knowing what the exact circumstances are....but if there is a valid reason, then yes......if just to get a further reduction from the Seller without a solid reason, then no.....I wouldnt say its common practice...and if the Seller is being squeezed for additional money/price reduction...then perhaps the question of whether its ethical or not can come up.....
Consult with your Realtor who will have a better understanding of the full situation.
All the Best, Be well and safe,
After all contingencies are removed, the only reason for renegotiating the price could be that new disclosures, new elements just showed up, things that were not known (by the buyer) at the time of contingency removal, things that affect the value or desirability of the property. But then you most likely would be in a "legal" area, and your agent should advise you to talk to an attorney.
Pat Chadwell, broker
Realty World - Residential Specialists
408-927-6565 x 11
CRS, SRES, CDPE, CIAS, ePro, SFR