Home Buying in 90024>Question Details

risingdeepst…, Home Buyer in 90024

what if offer is accepted but buyer cant get a loan.?

Asked by risingdeepstar, 90024 Mon Oct 29, 2012

Could the buyer back out within 3 days? How would the escrow know that the buyer has backed out? IS buyer obligated to make the initial deposit?

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14
This is exactly why you should get pre-approved before you start looking at homes. This is exactly why sellers shouldn't accept an offer from someone who doesn't have a pre-approval letter. Moral of this question is: buyers should always be pre-approved.
1 vote Thank Flag Link Mon Oct 29, 2012
Well said and to the point. People are still doing things backwards, looking at homes and then trying to get preapproved. Always needs to be the other way around.

Paul W Thompson
Mortgage Consultant
HomeStreet Bank
(360)314-3536 Office
paul.thompson@homestreet.com
Flag Mon Nov 12, 2012
First when the offer is presented there should have been the buyer's pre-approval. No offers should be considered without valid buyer pre-approval. Plus there should be verification of funds. Verification includes down payment amount, + closing funds amounts + cash reserves. With accepted offer buyer's deposit should have been placed in escrow within days. Sounds like you have no pre-approval and buyer cannot qualify for loan to purchase your home. Additionally, there is no money in escrow. You do not have a deal. There should be a written cancellation from escrow signed by both parties. You can try to force buyer to deposit deposit but why should they there is no deal they do not qualify.

I would suggest moving on and the next buyer get pre-approval before accepting offer. With pre-approvals as a Realtor I verify validity of approval. Plus you need verification of funds with offer. Additionally, buyers should have deposit in escrow within a few days from acceptance. Good Luck!


Gail Mercedes Cole
EXP Realty
310.853.9933
0 votes Thank Flag Link Mon Jun 10, 2013
not necessarily true. I have ALL those things you listed above and the property I made an offer on is 40k less than the mortgage amount on my pre approval letter yet the bank does not want to give me a loan. they want to tell me that my dti is higher than the limit...i find that odd since i was very specific with them in the beginning and provided them with EVERYTHING they asked for only to get this far and have to go through this...nothing has changed in my financial since i got the pre approval letter but yet still I end up being the guy that looks like he can't afford what he is going for....
Flag Sun Dec 15, 2013
You need to speak with your realtor who wrote the offer and find out what the contingency periods are. Usually the loan contingency is 17 days, and if you cannot qualify for the loan then you should be able to cancel without penalty. Hope you've resolved the situation.
0 votes Thank Flag Link Wed Nov 14, 2012
What happens is that everyone is upset!
Buyer must be Pre-Approved for a loan before viewing begins!
0 votes Thank Flag Link Wed Nov 14, 2012
Sounds like you submitted an offer with out being pre approved for a loan.

If you are backing out after making your deposit, and you are backing out because you can not get a loan,yet and it has only been three days you should be able to get your deposit back..

Escrow will know you backed out because your agent will have to submit cancellation forms to escrow.

The last part of your question kind of sounds like you have not actually made the deposit, if that is the case, and you are canceling within three days of your offer being accepted, you have nothing to worry about. Just have your agent submitt the cancelation paperwork.

Best of luck to you,

Kawain Payne, REaltor
0 votes Thank Flag Link Thu Nov 1, 2012
If you haven't gotten your initial earnest money deposit into escrow then you can back out. The escrow is at risk if you don't get the earnest money deposit in with 72 hours of acceptance.

I may have the fix for you where you wouldn't need that much to close? If you use the CHF Access half percent down payment program with a minimum 580 fico score to qualify which can also contribute towards your closing costs. You could close the transaction with less than what the earnest money deposit requested is? You can not get any money back from your deposit after funding this loan so that the agent negotiates the earnest money deposit not to be more than the needed amount to close and fund the loan.

I would need to know more to be able to advise you because if you act fast with an approval which I can get in minutes, could save your deal? Keep your agent and the offer going and get a DU Approval to furnish to the seller along with the details of funds needed to close and waalaa, done. Have your agent contact me and I will assist her but you must act fast...

Sheryl Arndt, Broker - Sr. Loan Officer
760-486-4225
0 votes Thank Flag Link Mon Oct 29, 2012
In most contracts there is language stating the buyer will apply for financing w/i a certain amount of days. if the buyer aplis in good faith for a loan the deposit is normally refundable.


good luck
0 votes Thank Flag Link Mon Oct 29, 2012
Yes you can if you write (or have written) the contract properly and you have followed the procedures accordingly.
0 votes Thank Flag Link Mon Oct 29, 2012
You need to check contract for loan contingency terms. Usually it is by default 17 days. ( there for most likely 3days withing contingency period). If you have a realtor - it is best to talk to your realto. If you don't have a realtor- please feel free to call me - ill be able to help you and explain everything in details.

Please call me direct 424-777-9377 - I'll be happy to help you!



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0 votes Thank Flag Link Mon Oct 29, 2012
Good question. First you get the accepted offer, and the buyer can not get a loan, then you move on to another offer, and make sure that buyers agent has sent you a approval letter from a local lender that has qualified that cilent. You need to do that first before you accept a offer . So you need to give that buyer his deposit back. You just let escrow know , it will take about 2wks before the buyer gets his money back. Read you contract. You will get another offer, if you have already. Diane 714618-8031
0 votes Thank Flag Link Mon Oct 29, 2012
Hello risingdeepstar,
Most likely you can back out within 3 days. Read your contract's terms, conditions, and contingencies deadlines. I don't know whether you have an agent representing you or not, but you can write a cancellation letter / document to escrow with instructions to cancel this transaction due to buyer not able to obtain loan, for example, and to have your deposit return. In general, escrow would need seller's signature in order to release your deposit.

Good luck.
0 votes Thank Flag Link Mon Oct 29, 2012
Under a standard CAR contract the buyer has loan, appraisal and inspection contingencies. Under these contingencies you would have the right to cancel. However, there is a covenant of good faith that sellers can challenge in which the buyer must act in good faith...for example, a buyer can't string along a seller with no intentioin of ever performing. I don't know your situation but it sounds like you are ok to cancel. Complete a notice of cancellation, notify escrow and move on. Consult with your agent and/or a real estate attorney.
0 votes Thank Flag Link Mon Oct 29, 2012
Both realtors should have checked Buyer's qualification to prevent this mishap. Now everyone has to do the paperwork to undo what you agreed to.
0 votes Thank Flag Link Mon Oct 29, 2012
You should have a loan contingency in your contract. If you haven't given your deposit to escrow yet, then issue a cancellation form (the seller will also need to sign it) and move on. Be above-board about not being able to get your loan. As I said before, if you've tried in earnest to get approved for a loan, then your within your rights to cancel the transaction.
0 votes Thank Flag Link Mon Oct 29, 2012
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