Home Selling in 01060>Question Details

Soxfanatic, Home Seller in 01060

A buyer has asked us to let him have his earnest money back. This comes after the deadline and after the bank gave their commitment letter.

Asked by Soxfanatic, 01060 Mon Jan 23, 2012

The earnest money is 14,000 and is being held by our realtor. Should we fight to keep the money or negotiate a settlement with the former buyer?

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8
Depends on what damages (could be time) you have incurred. It sounds like the seller is under some kind of distress due to the new rate. Unfortunately this comes down to how strongly you feel about the sellers position and its impact on you. If you are asking sounds like you are torn so perhaps offer a meet in the middle (split the good faith deposit). tell him either half or you are well within the legal right to keep the full amount.

Good luck!
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0 votes Thank Flag Link Tue Jan 24, 2012
If he doesn't want to buy the house you should give him his money back. If you feel you have lost valueable market time and suffered any damages , like moving out or lost a home you had an offer on then review these things with your atty. If he failed to get a mortgage he should be able to get his deposit back. Depends on the contract.
Some people get a change of heart. I hope you find another buyer soon.
0 votes Thank Flag Link Tue Jan 24, 2012
The buyer never signed the letter of commitment from the bank. He left on a trip prior to signing the document. When he returned from his trip, the bank rescinded the offer but offered him a new mortgage at a different rate. At that point he wrote me a letter saying that the entire transaction left him feeling sick and wanted out of the contract.
0 votes Thank Flag Link Tue Jan 24, 2012
Why is the buyer backing out? Just because? Or was there some kind of emergency?
0 votes Thank Flag Link Mon Jan 23, 2012
While I'm not a real estate attorney, and this should not be considered legal advice, I'm going to give you the typical attorneys answer: "it depends".

It depends on whether or not all the contingencies have been met. Personally, if all the contingencies have been met, I would wait to see if you can find another buyer. And when/if you do find another buyer, you'll be able to tell if this client backing out of the deal has cost you the $14,000 or more.

If you end up selling for $14,000 less (or even less), then you'll have what's commonly called: "damages", and in my mind, be entitled to keep the full amount. If you end up only losing $5,000, you might want to negotiate the $9,000 difference with the former buyer.

Consult with your Realtor, and/or a real estate attorney (if they use those where you are). Good luck.
0 votes Thank Flag Link Mon Jan 23, 2012
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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First, read your Purchase Contract carefully. Second, consult with your agent. Third, ask a lawyer. On the surface of it, I would think that you are entitled to keep his deposit, but these things are rarely simple and folks usually end up negotiating a settlement to get it ended. At least, with $14000, you have something worth arguing about.

Why does he want it returned?
0 votes Thank Flag Link Mon Jan 23, 2012
Since none of us are directly involved in the transaction, before making any decision it may be a good idea to consult with an attorney who specializes in real estate; have all related documentation reviewed and go from there...
0 votes Thank Flag Link Mon Jan 23, 2012
Depends.

Technically, in part, it depends on the reason why the seller is backing out. You're suggesting that the financial contingency has been satisifed. But are there other contingencies that haven't been? If so, then the buyer may be entitled to the return of his earnest money.

Assuming, though, that the buyer has simply gotten cold feet and that you're 100% in the right, you could play tough. Or you could negotiate. Ask your Realtor for advice on that. There's also the question of re-marketing the property and how a protracted battle over the earnest money might affect the timing. Again, your Realtor can advise you on that.

Hope that helps.
0 votes Thank Flag Link Mon Jan 23, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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